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Rick Rule Approach and Ideas


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The recent references on the Altius thread to Rick Rule made me curious to find out more about him so I thought this thread would be appropriate.

 

If you want to get a better idea of how Rick Rule thinks, you can watch the BNN show he did on Oct 18 2010 at:  http://watch.bnn.ca/market-call/october-2010/market-call-october-18-2010/#clip362225

 

See: http://www.gril.net/interview/rick-rule-on-the-energy-report-caution-extreme-volatility-ahead for some of his views on the future of oil, gas and geothermal.  His beliefs about gas should encourage those on the board who are optimistic on SD.

 

See: http://www.metalsnews.com/MetalsNews/Allen+Alper+Jr.+and+Aaron+Hoos/EXPERT288861/Rick+Rule+Explains+Why+and+How+a+Contrarian+Approach+is+a+Profitable+Approach+for+Investors.htm

 

One of his ideas that has gone down since he mentioned it is Ram Resources, a geothermal company which Rule identifies as being in one of his favourite areas.  He must have originally recommended it at about $3.36 per share as it was down 33% when at $2.24 on Oct 18.  “BANGALORE, Feb 7 (Reuters) - Canada's Ram Power Corp <RPG.TO> said its San Jacinto-Tizate project in Nicaragua encountered construction delays, and was also facing higher material and labor costs, sending shares of the company down to a nearly 21-month low.”  Probably as a result of this news, Ram closed at $1.50 today.  It looks interesting, but I have no idea how to estimate its potential revenues a few years out when several of its projects are completed and it could start to be priced as a utility with stable income.

See: http://www.ram-power.com/

 

 

 

 

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I believe Ram was a top pick of Rule on his former appearance on BNN.  About half way through the present show they look at the former top picks and how they have performed.  So go to the Oct show and listen to the discussion when they were talking about the past picks.   I have not found his earlier show and don't know if it is still available.  Rule did seem to make a good impression on the show.

 

I notice that in http://www.stockhouse.com/columnists/2010/feb/8/rick-rule-s-favourite-resource-sector and apparently also in the same article at http://www.commodityonline.com/news/Rick-Rule-and-his-fancy-for-geothermal-uraniium-25597-3-1.html that it identifies Rule's favorites as being geothermal and uranium.  The following quote from this source might help.

 

"I really like geothermal," he says. The best place to explore is in the U.S. Political consensus is that geothermal is good. Power companies want it and are willing to pay up for it. They pay up for it because it's green. Political subsidies make the economics of geothermal really compelling. Rule maintains you can earn a 22% internal rate of return with a cost of capital less than 5%. These are far better than returns generated by solar or wind projects.

 

"I can't say when geothermal will take off," Rule said. "But the businesses work stupidly well. They really work. It almost doesn't matter what stock you buy, just own the sector." Rule reeled off four names to own – Ram Power (TSX: T.RPG), Nevada Geothermal (TSX: V.NGP), Sierra Geothermal (TSX: V.SRA), and U.S. Geothermal (TSX: T.GTH).

 

 

 

 

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I've had the pleasure of hearing Rick speak the Resource Conferences that pass through town from time to time and also articles and video clips online.

 

I am very very impressed. Rick is one of the most astute investing minds I have ever had the pleasure of hearing and I listen very carefully at how he thinks abou the subject. I've learned alot and I think he's up there with the greats like Buffet in terms of having a very deep understanding of the game and the interplay between investing and speculation.

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