Post by
68Charger1 on Aug 14, 2024 9:37am
FDR vs. the Efficient Market Hypothesis - revisited
I have definitely discussed this general topic before, but I was struck this morning by the specific parallel between the rarity of gold in the ground and the rarity of mispricing of stocks (of any industry). And, simultaneously, how rare FDR must be as a stock that is illustrating this mispricing using actual gold mined by artisanal gold miners.
As we know, the EMH is used in broad terms as a guiding principle for asset management. And there is an argument to be made that, within very loose parameters, this makes sense from a perspective of preserving wealth.
However, for those of us aiming at *creating* wealth, a category into which most of Founders’ shareholders fall, the rules are different. Drilling down (no pun intended), we find that the market misprices things often enough it is a profitable use of time and effort to seek out such mis-priced stocks. And what do we see when we look at FDR?
Yes, gold explorers very often get their stock prices re-rated once the assays prove up ounces in the ground. Most of those, however, are prospecting on properties that have never yielded up a single gram of gold in all of human history. But Founders is in the extreme position of practicing its art on ground from which 500,000 ounces of gold have already been extracted. Where, exactly, is the source of doubt about what Padget and friends will find there?
And the doubt about how *much* he will find there? To paraphrase Elon Musk, once we as FDR owners move from being a “one [deposit-zone] species” to a “multiple [deposit-zone] species”, we have assured our long-term prosperity as FDR shareholders.
All of which is to say, yes, I do expect a fast re-rating of the stock price once strong Buese assays arrive. I find it increasingly astounding said re-rating has not already happened. Enjoy the rest of the week, fellow FDR travelers.