My wife & my 3 year-old son are not so excited about the new Pirates of the Caribbean movie. Most kids like pirates (I know), the young girls like Orlando Bloom (I guess), & the older women just likes Johnny Depp (I think)!
Of course, I'm most interested in the economics of the real pirates of the Caribbean. I'm talking about more than "pirate gold", but commodities & resources. I think commodities & natural resource investors can learn a lot from the pirates. I'll give you some specific below.
First, precious metals never go out of style. In fact, they are back in style! Gold & silver are great investments today. Why? Because they continue to have real value. And I believe uranium is our new "white gold" — a commodity that will ride a groundswell of demand that increases not only over months, but years. Supplies of uranium fell short of demand by 70 million pounds last year alone. And the supply/demand squeeze is going to get much tighter. In fact, some analysts say mine supply won't meet global demand until at least 2017. That's a 10-year bull market, which makes uranium look like a darned good investment!
Second, it's best to become an early investor. The first pirate to attack a Spanish treasure fleet was Jean Fleury, a privateer sanctioned by the King of France. In 1521, he bagged two lumbering treasure ships off the Azores. In those early days, nobody was expecting piracy in the middle of the Atlantic, so the treasure ships only had a few cannons & no chance against a heavily armed & determined pirate.
Third, think big by looking at the long-term picture. By the time Henry Morgan (an English knight turned pirate) came along, pirating was already a booming business. So he didn't have the first-in advantage of Jean Fleury. But he continue to prosper in his new pirating business. Here's the point for investors: Even if you find out about an investing trend after a lot of the easy money is made, you can still make big money with good timing & a long-term view!
Fourth, good management is critical to an endeavor's success. Sir Francis Drake was a brilliant pirate & is also cool under fire. Drake didn't give up in the face of adversity. When his scheme to attack the city of Nombre de Dios blew up in his face, he had his crew lay low for four months. Then, when their wounds were healed, they ambushed a gold-laden mule train. Nobody expected a pirate to attack a mule train! Drake bagged 200 mules carrying hundreds of pounds of silver & gold. Investors would be wise to emulate Drake's resolve & resourcefulness. And they should also look for these same traits when they investigate the management of a company they're about to invest in.
Fifth, good PR is worth its weight in swag. When pirates flew the skull-&-crossbones flag, they were advertising. And the message was simple — "Give us your cargo or we'll kill you."
Pirates relied on their fearsome reputations & publicity. One pirate, Captain Edward "Blackbeard" wound cannon fuses into his beard & set them on fire during attacks to make himself look like the devil. Though it's slightly different these days, good advertising & publicity can still do wonders for the investment business. Well-executed PR helps companies bring in revenue more quickly & at greater volumes. It also helps get the word out to the investment community.
Pirates relied on their fearsome reputations & publicity. One pirate, Captain Edward "Blackbeard" wound cannon fuses into his beard & set them on fire during attacks to make himself look like the devil. Though it's slightly different these days, good advertising & publicity can still do wonders for the investment business. Well-executed PR helps companies bring in revenue more quickly & at greater volumes. It also helps get the word out to the investment community.
So, go ahead & trade like a pirate!
