RE: Can Someone Please Explain ? Ken
Your explanation as to the low P/E ratio of HBM and its brethren is bang on. It is basically the analysts et al. following the rules of Econ. 101 LOL!
I am not as sure as you are though that the "already priced 1/2 ..." argument is enough to provide a floor to the SP in the event that the "Econ 101" scenario does indeed unfold. Why do I say this ... the mkt is irrational, as you know, it always overshoots in a fit of irrational exuberance or bludgeons in a fit of manic depression - "chicken little" strikes!!! I am thinking that even if China/India prop up the world economy during a US slowdown, it wil NOT do HBM, et al. share prices a bit of good. Let's face it, it is not Chinese investors that are holding HBM shares .... it's Americans and Canadians, for the most part. And if the US goes to recession, Canada is sure to at BEST slowdown. That will create massive pessimism and base metal shares will get hammered AS liquidation of stock positions occurs and a flight to safety happens (gold/bonds/t-bills). Will the SP's come back? Likely over time, but I sure as heck don't want to have a paper loss on the books of 40% for 1-2 years on my HBM and other metal company shares.
Because of this, I have been lightening my metal holdings slowly but surely over the last 2-3 months, every time HBM et al. spike up I sell some. I am hedging my bets, as I am not sure what is going to happen. But the fact I am not willing to just dump ALL of my metal plays (HBM et al.) tells me that I am as uncertain as the greater market is as to where the economy is going in the next 3-6 months ... world recession, slowdown, US only slowdown, US only recession, soft-landing, continued world-wide expansion yadda, yadda, yadda ..... God I am giving myself a headache, I am heading to the gym to work off my stress LOL!
Good luck with your plays Ken!
Gulo19