Book Review
Trading in shares of resource companies listed on the boards of the Australian Securities Exchange has, in recent years, become part of the Australian psyche as a punt on the horses.
There is little wonder this has occurred. Both provide the punter with the challenge of following the form of their respective favourites and dreams of big returns.
If they choose the right bet at the right time the gains can be worthwhile, choose incorrectly, or back the wrong charge and the results can be calamitous.
Chasing the long odds on a horse race is really no different to an uneducated plunge on a three cent mining company stock with the idea that it has to hit ten cents soon.
To give those keen on playing the resources share market industry insider and analyst Dr Allan Trench has put together, A Sharebuyer’s Guide to Investing in the Australian Mining Boom.
I was about half way into the first chapter of Trench’s offering into the machinations of the resources industry when I turned to my partner and said, “This is a really good book”.
Some people may consider that to be a pretty bold statement considering I was only on page eight of what is an almost 500 page tome but there it was – out there – and I still don’t feel any compulsion to withdraw my original declaration.
Trench’s aimed-for-readership are investors he describes as those, “who fall within the spectrum of market participants that lie somewhere between the pure long-term, passive investor and the dedicated follower of day trading”.
In other words anybody who takes on the share market, either because they believe they know what they are doing or believe the “can’t miss” tip they heard in the public bar of their local last Friday night is the sure thing it promises to be.
Trench takes his readers through the different stages of the life of a mining company from early mineral exploration through to the development of an operational mine and the complexities held therein.
He also looks at the different forms of investing that are open to investors besides simply buying shares.
He points to systems of the seasoned investor such as watching when share purchases and sales are made and who is making them, what activities, if any, an exploration company is carrying out.
Techniques that seem simple enough, but are what many potential investors fail to consider or recognise the importance of.
These are followed by profiles on different commodities, many of which feature prominently in the portfolios of junior exploration companies.
Trench then presents a snapshot of several different companies that are chasing these commodities around the country and other parts of the world giving a brief insight to how they’re travelling and what pros and cons each may have to offer.
Throughout he provides an unpretentious commentary on what all investors, from the ingenuous to the sophisticated, should be wary of before they hit the ‘send funds’ button on their internet share trading home page.
Trench’s experience as a geologist and company director for numerous companies over the last 20 years is obvious in the foresight and advice he offers.
If I was to offer any criticism it would be that, at times, the language, especially when explaining technologically-based exploration techniques, could have offered those unfamiliar with the sector greater enlightenment.
However, self-improvement is one of the mantras of the 21st century and if people are reading this book they should also be prepared to undertake further tuition to learn more about what their investment is buying them.
This is a book that not only mining investors, new and old, should read but is one many a hoary old business journalist should place on their night stand as well.