Dave Killion — December 13, 2013
Just over two years ago, I told you how I was having fun collecting nickels of a certain date. At the time, the melt value of those coins was in the vicinity of 12¢ each, and I have accumulated about (face value) $200 worth. How has my investment fared? Not so well. As of this writing, those nickels have a melt value of merely 6¢ each! There was a time when I was buying rolls of nickels from the bank and sorting through them, but now it’s hardly even worth the effort to check my change every day and pull the ‘good’ nickels out. How has this come about? Reed Watson and Greg Sauer of the Property and Environment Research Center have the answer –
“The price (of nickel) peaked in 2007 at $50,000 per metric ton, up from $10,000 just a few years earlier. Responding to the scarcity, Chinese entrepreneurs figured out how to substitute a lower-grade nickel known as “nickel pig iron” in the steel manufacturing process. As a result, the price of nickel plummeted to $14,000 per metric ton, and China became a leading nickel producer.”
Despite the devastating effect these Chinese entrepreneurs have had on my speculative ambitions, I’m glad to see yet another concrete example of innovation overcoming scarcity.
David — December 7, 2012
A few months ago we added another pillar to the Victoria Libertarian Book Club by creating an investment club. The turnout has been small so far but the new group has housed many interesting conversations and facilitated a ton of learning. The group is lead by Gordon, a member of the Libertarian Book Club, and he is very knowledgable in the area of investing and the markets.
The first book we read is called How Buffet Does It (24 Simple Investing Strategies from the World’s Greatest Value Investor) by Warren Buffett. It is an excellent introduction to Warren Buffett’s investing style which is known as value investing. The chapters are bite sized and can be read in a short sitting. Packed with wisdom I can’t imagine that their are many other books out their with this much good advice on the subject. More than once I stopped while reading this and thought to myself how much sense this book makes. Its truths are simple but powerful. Here are a few of Buffett’s suggestions for long term value investing: a) Don’t own any stock for 10 minutes that you wouldn’t own for 10 years. b) Do your own research. c) Be patient. d) By business, not stock.
Moving on from value investing Gordon decided to pick Reminiscences of a Stock Operator as our next book. Although we haven’t finished this book yet I can tell it is fantastic so far. Praise has been heaped on this book from many corners and for good reason. After twenty years and many re-reads Kenneth L. Fisher of Forbes says it is still one of his favourite reads. It is a classic and well worth reading whether you are interested studying investing or not. It is about the life of Jesse Livermore, a man who began investing at a very young age in New England bucket shops. He ends up on Wall Street where he makes and loses fortunes several times over.