[0:00]and accustom yourself to the fact that the market could be up 20% in a month and then give back that 20% over a long weekend. Uh, the one thing I'm certain about for 26 is that we will experience breathtaking volatility. If you're prepared for that volatility, both psychologically and financially, you'll do fine. in late 2025, August to be specific, I sold 25% of my junior stock portfolio. Mhm. I did it because by selling 25%, I recouped all the capital that I had invested in the sector and paid the capital gains tax on the sale. Mhm. In other words, I sold off 25% of my upside, a quarter, and I eliminated my downside. That's a pretty good print. I'll put a link in the show notes to your conference, Rick, when is it and where is it at? But I'll put a link. July 6th through 10, Boca Raton, Florida, the Boca Resort, for those of you who don't know it, 180 acres in downtown Boca, half a mile of Atlantic Ocean waterfront,
[1:16]Yeah. A palace. Uh, lots to do there, separate and apart from learning, but I encourage you to spend most of your time on learning. If you can't make it to Boca, and by the way, we're going to sell out of physical seats within 30 days. If you can't make it physically, which I would prefer, uh, you can join 3,000 people in 33 countries online, live stream. However you join, live or live stream, you'll have access to the recordings and you'll need them. We're going to give you 46 hours of material, some of which occurs concurrently, over four days. There's no way you can take it in. You cannot take it in. I put on the conference, I select the speakers, I select the exhibitors, and I still have to play the tapes. Rick Rule, good after afternoon to you my friend, it's really good to see you. It's been a little while. How are you? My pleasure, Andy, thank you for having me back. No, anytime, anytime. So, we're in mid-February here, but I, uh, I couldn't get you earlier because, uh, you are in high demand. But, uh, I wanted to talk about just set this up with what are your, if you have, do you have any things or what are your expectations for 26 if you have any expectations? And I'll share mine. Well, I'll tell you, I I I thought 25 was going to be a pretty good year. Boy, was I wrong, it was a spectacular year. Right? And I think part of the performance that I would have expected to enjoy in 26, I enjoyed in 25. Uh, which is to say, I think for the next 10 years, that precious metals and natural resource markets will do well. But I think some of the performance that we would have expected in a normal year was already used up by an extraordinary year. Uh, I think we will see for better or for worse, a lot of volatility. Uh, I know that the precipitous decline that we saw February 1st, in silver, unnerve a lot of folks. Uh, I've been in the silver market for 50 years, so, it neither unnerved nor surprised me. But we'll see more of that. Uh, but I I think your listeners need to come into 2026, understanding that the move that occurred in part of 2024 and 2025, was really reducing tension on a coiled spring. In other words, some of the move that we enjoyed in 2025 was a delayed move from prices that didn't move in 20, 21, 22, 23, 24. That coiled that latent energy has been used up. So, don't look for 26 to repeat 25. Look for it to be a good year, but not a great year. Think of it in the context of what has to happen over 10 years. And accustom yourself to the fact that the market could be up 20% in a month and then give back that 20% over a long weekend. Uh, the one thing I'm certain about for 26 is that we will experience breathtaking volatility. If you're prepared for that volatility, both psychologically and financially, you'll do fine. If you weren't, you'll be shaken out for no reason. Yeah. About that. So, you might have used the same saying and I use it all the time and our friend Doug Casey's used it, volatility is your friend. Embrace volatility. He can be, he can be. Yep. Um, work that out a little bit more for me in the, in the regards to being disciplined in portfolio management, and I say that to give all viewers and listeners, this is not a pat on the back because as Rick just alluded, I was early to this move and I did great in 25, but I was early to that move and I took my lumps before then. So, just full disclosure.
[5:00]But I was started taking profits in fall 25 and it was just really just for anything else, just an exercise and discipline. I just had to take money off the table. Comment about that and the importance of that. And again, that's using volatility as your friend. Well, that's correct. Um, we in October of 25, had a day that had it occurred in commodities would have been locked up.
[5:25]Uh, there was no ask in the junior equity markets. There were all bids. I've learned in my life that you do whatever the market makes makes really truly easy. If there's no asks, you serve the market and throw up an ask. If there's no no bid, you serve the market and throw up a bid. So, I like you, in late 2025, August to be specific, I sold 25% of my junior stock portfolio. Mhm. I did it because by selling 25%, I recouped all the capital that I had invested in the sector and paid the capital gains tax on the sale. Mhm. In other words, I sold off 25% of my upside, a quarter, and I eliminated my downside. That's a pretty good print. Now, I had what I guess was an unusually good collection of stocks because the remaining 75% has now attained the value that it was before the sale. Do I feel bad about the sale because of the money left on the table? Not a bit. Not a bit. Volatility works both ways. Right. What you learn if you've been in markets as long as I, is that when a stock chart goes parabolic, what the Canadians call a hockey stick chart, where it goes straight up, it's going to go straight down for a while after that. The backside of the stick is just as steep as the front side, but if you're long it's a lot less fun. So, from my viewpoint, whenever I see a parabolic upside, assuming that nothing else has changed, I sell.
[7:08]Similarly, when I see a day like we had not too long ago, where it's a parabolic downside, you might buy. I'd like, as an example, right now to increase, uh, fairly substantially my oil and gas portfolio. But the oil and gas stocks are trading up. They're trading up because of news in Iran. They're trading up because of Venezuela. They're trading up because of Trump's alleged, allegedly tougher Russian sanctions. And so, I'd like that market to cool off. I'd like the oil quote quote, which is now priced up to, you know, spiked up to 66. I'd like it back around 53, 54. And it wouldn't surprise me if I got it. Uh, I I'd like to greatly increase my position in Schlumberger. Schlumberger's on fire. Which is not what you want if you're a buyer. That's what you want if you're a seller. So, I'm praying for a little negative volatility in the oil price. So, I was going to go to later but let's go there now because we also talked about diversifying our portfolio. And you I, I paraphrase, I want to make sure I get this right. You said at the time the oil and gas market was similar to the gold market X amount of years ago, it was just a few years ago. And I was already nibbling in some of my favorite names before then. And this movement scared me. Not scared me in the sense that I'm right, but I'm like you, man. I don't like I like to buy stuff at a bargain. I like pain. I want pain. So, Well, I was able for the last two years, until very recently, to buy X on. Right. I think I said in an interview with you, Exxon at $100 is a gift. Well, that's fine, but it's at 160. Right. I told my mother who watched that interview. I just go, she goes, what do I buy? I go, honey, mom, just buy Exxon. I'll send this to her, so then she did. Right? Yeah. And you know, X on at 100 is not the same as X on at 160. Because I already have a big position in X on, I don't have to buy it. Right. Make no mistake. I think over five years it's going much higher. And if you and I interview in five years, if I'm still alive, we'll probably look back at this and say, why were we price sensitive? It didn't matter. But right now it matters. Right? Well, that's the thing. I need to say something else, Andy. Um, I bought, uh, well, that's not true. I put in bids on five oil and gas juniors yesterday. I was under invested in the speculative part of my oil and gas, because I said to you, uh, the big guys are so cheap, I don't need to speculate.
[10:04]I got a good enough move out of beta. I don't need to chase alpha. Right. But there's a subsector of oil and gas juniors, people that aren't in the United States and Canada. They're in countries that people hate and they aren't in shale. They're in conventional offshore exploration. And those stocks haven't moved at all. There are, uh, some seismically supported plays, that I think have wonderful risk reward parameters, provided that you understand that they're risky. And I'm not going to give you the names because I'm not filled yet. Yeah. But let me tell you what they share in common. Yeah. Each one, is exploring for what could be a very large discovery. Uh, and each of them are well seismically supported and they have producing analogs in the same basin. Mhm. Which is to say there's good exploration science. They're well enough seismically supported that the industry would tell you that each discovery hole stands between a 25 and a 35% chance of success. Uh, turning that the other way around, there's a one chance, or pardon me, there's a three chances in four that you fail. Right. Or two chances in three that you fail. In other words, the probability is failure. Yeah. Because they're public, in other words, because I'm not drilling a well with my own money, where if a if a dry hole goes to zero, the likelihood is that on an unsuccessful effort, I lose 35 to 50% of my money on any unsuccessful effort. By spreading my risks over five bits, the upside is if I hit, I get 15 or 20 to one. Yeah. So, the gross arithmetic is I have five starts. I have a, let's be conservative and say 25% chance of success at any start, which means statistically over five starts, I likely have one success. Right. On my four fails, I lose 35% each on four starts, and on my hit, I get 15 to one. Yeah. That's pretty good math. The math works. That's pretty good math. What I like about it is there's no premium. There's no success premium. Mhm. Uh, these little petty dreadful silver mining stocks, you know, somebody right now gets some surface samples, particularly if they get the surface samples in British Columbia or, you know, Colorado in the United States, the surface sample gives him a $15 million valuation. Which is to say there's an incredible premium built in for the expiration expectation of success. Mhm. In these little offshore juniors, because they're in countries that many people can't pronounce, uh, offshore exploration is unloved. These countries are unloved and oil and gas is mostly unloved. So, there's there's a situation where I just I couldn't help myself. Uh, I had to take this exploration shot. Okay, so I want to work a little bit about that because you're I love the risk assessment and it's almost gaming in the sense of just playing probabilities, right? You're playing probabilities. Right. But what's also, I think you most people lose is that you're going for a big asset. You if you're I can't emphasize this to your listeners enough. If you're taking the risk inherent in exploration, which whether you admit it to yourself or not, has the probability of failure.
[13:54]In other words, more likely than you lose that you lose money than you don't. The wins have to amortize the losers. Uh, and you can't be playing a speculative game, a real speculative game for a double or a triple. That can be your interim goal. At a double or a triple, you take enough money off the table that you've de-risk the rest. I get that part. But you have to be playing the game for a 10 bagger, uh, or else, uh, arithmetically, you're not speculating, you're losing. There are a lot of people for whom a win is psychological. Uh, which is to say, they take a risk of a wipeout. They make 30% on a trade and they go home happy. Those people are dumb, because the expectation over 10 starts is that you have six or seven losers. If you make 30% on two and you lose 25% on eight, guess what? You might feel good about the two, but you've done yourself an enormous disservice financially. Uh, in exploration, the size of the prize, the probability of success and the cost of the test are the questions you have to ask yourself. Okay, so another thing is that you mentioned because I have, I have all US, I have all US and Canadian drillers, as I call them. Um, and producers. I'm interested in other jurisdictions, but what I guess my question would be, how do you determine value in these other jurisdictions? And that's what I'm afraid of. I I have to be it has to be stupid cheap for me to go to some of these places. Right? Well, uh, I I would sort of agree with you. Uh, but I have to say, my worst experience with political risk was in the People's Republic of California. Yeah, right. I'm not trying to say that Guyana is good or Namibia is good. I'm trying to say the United States is bad too. Yeah. Uh, it's predictably bad, which is good. What we do have in the United States, mostly, is the rule of law. Uh, some parts of the United States like California, they aren't, they aren't exact, you know, they aren't paying attention to the rule of law, but it exists. Um, there's predictability. But you you have to look at the other jurisdictions on a case-by-case basis. Uh, what's the fiscal regime like? Can you get a fiscal stability agreement? You know, a lot of these countries, uh, they're real cool with you fiscally until you make a discovery. And then when they see that there's three or four billion dollars to steal, they change the terms after the fact. They take it. Yeah. But if you have a fiscal stability agreement before you drill the well, uh, where they're bound by that agreement for 20 years and where it's arbitrated in Stockholm or Geneva, that's a better circumstance. Uh, in some cases, a much better circumstance. So, you have to do it on a case-by-case-by-case basis. Uh, when I see smarter, more sophisticated players than I, Let's say, I see Exxon in a basin, Chevron in a basin, Total in a basin, uh, I feel better about that basin. Uh, when the concession that I'm drilling, uh, or that I'm even just shooting seismic on, has a fiscal stability agreement in place with the host government where they can't change the terms on me after discovery, uh, I can afford to be more generous. The difficulty I thin, well, difficulty, I guess the advantage I have is I'm competing with speculators who don't know what a fiscal stability agreement is. Yeah. Much less are willing to take the time to figure out if there is one. So, to come down to the five stocks that I bid on yesterday, they were narrowed down from a list of 31 stocks that I spent, I don't know, three or four months pawing through data about.
[18:10]And what, what was it then that made you pull the trigger on the bed or hit the bed? Um, really the seismic, uh, the probability of success. Now, the other thing was that each one of these five companies, has somebody who I've done a successful business with in the past. So, you knew them? Well, I knew some people in the company. Right. If it wasn't the CEO, it was the chairman, it was a director, it was the largest shareholder. Uh, I knew the reasons if any, why the stocks were cheap. Yeah. One of them is preparing to go into a truly foul jurisdiction. Uh, and they're going into a foul jurisdiction in an asset that I used to own part of before it was nationalized. Uh, and I I really like the asset. I know what you're talking about. I really like the asset.
[19:10]So, I just I have several questions. I'm going to rapid fire here, um, just for sake of time. Um, you just said the oil market is mispriced. So, then that begs the question, and I think I know what you'll say, because you're libertarian. Um, what is the right price? Well, near term the price has to come near term I think the price comes down. Right. It's trading up on news. Agreed. The news matters much less than people think it does. Uh, so near term, I would love to see the oil price pull back below 60. Yeah. But I think the oil price needs to be at a minimum 70. The oil market doesn't care what I think the price should be first of all. Uh, so that's an opinion as opposed to a fundamental. And markets don't go to their equilibrium, they overshoot both ways. What's more important to me is that the consequence of systemic under investment in sustaining capital and a hiatus in new capital. I mean, nobody other than Exxon is making big project investments, not sustaining capital but new capital. The consequence of that is that in three years from now, it is almost certain that the current production surplus, which hangs over the market, becomes a deficit. Yeah. You will remember, Andy, uh, the collapse in oil prices that we saw early on in the COVID time when demand for transportation fuel fell apart, and the oil quote, the oil quote declined from 90, 92 all the way to zero before recovering to 20 bucks. At 20 bucks, it was pretty clear that within two and a half or three years, either the oil price won above 60 or your car wouldn't start. Those were the only two choices. And the consequence of two years of systemic under investment in COVID times meant that the oil price didn't recover to 60, which is what it had to do, it recovered to 85. Right. And I think that's what we see again. Yeah. Okay, so and correct me if I'm wrong on this, uh, and I I do know something about I'm not by any means next, but I do know I do have some background in oil. You can't just once you you don't really turn off oil and you don't really turn it on either. So, it's not like you can just uh there's a uh a faucet there and you just crank it out higher. Correct me on I'm wrong. And then second, second question really is what do you think of the oil the valuation of oil service companies that could be a way to play this? As well as, um, um, I know you just put a bid in for exploration, but do you like exploration more than producers or, yeah, just work that out for me.
[21:34]Well, you asked three questions there, so I'll try to answer all three. Right. For the investment part of my portfolio, which is most of my portfolio, I'm not in the explorers. Mhm. I'm in the Exxons of the world. Mhm. Uh, I don't need to take alpha risk, because there's so much money to be made in beta. Right. You know, if you would have asked me a year ago, would I do in the oil business? I'd say, Exxon. You know, just relax. Buy the best. Uh, I I was on record of saying that I thought Exxon was a five-year triple from a 100. Yeah. What do you want? Right. You get a 3% yield while you wait, a five-year triple. Come on. Yeah.
[22:27]You know, this doesn't require a luck. Uh, the only thing it requires you to do is sit still. And I'm, you know, at my age, I'm good at that. So, now, in terms of investments, I have a much more full portfolio. Uh, where I wasn't with speculation. Uh, in other words, my speculative portfolio in oil and gas, unlike my speculative portfolio in mining, was pretty empty. Mhm. And what, what appealed to me was that there was one subset of oil juniors, that the market hadn't caught on to at all. The $200 million market cap Western Canadian sedimentary basin stock has moved from a $200 million valuation to a $280 million valuation. Is it over? No. But is that $280 million valuation substantially cheaper than a $6 or $7 billion Canadian valuation for a better company?
[23:24]No. So, I'd rather be in the bigger company with less risk. Yeah. With the international offshore explorers, these things are truly orphans. They are truly, truly, truly orphans. I look at the trading pattern. And the existence of a bid moves the stock up. Yeah. The existence of an offer moves the stock down. I mean, these things are trading by appointment. Yeah. So, I know that I have to use good to cancel limit orders, but sometimes there's somebody who's been waiting to get off. Well, they'll wait. They'll see if the thing comes up as a consequence of the bid. But then, poof, you know, boom. Yeah.
[23:47]Well, it the it goes into a thesis I have of, uh, you know, I I I was thinking of the 49 Gold Rush, right? And it's like who made all the money? The people that sold all of the equipment to the gold miners. And so, I'm just I'm applying that or trying to apply that really poorly, uh, to the, uh, the oil market, right? So, Yeah.
[24:08]I again, I have oil stocks, all of that, but I was like, these whether it's a well or whether it's a field or whatever. These are highly under developed, but not only under developed, they're undertaken care of. Uh, just because of oil prices where they're at. And you can see so many deals out there, and so I'm like, I should pick up some of these is but again, I don't And your gross your gross thesis is right. Yeah. When the capital expenditure cycle kicks up, particularly if if Venezuela stabilizes, uh, and you get a realistic fiscal code in Venezuela, there's going to be a hundred billion dollars spent there. Yeah. Uh, a lot of guys are going to make it. The difficulty is when you use the Gold Rush in 194 in 1849 as an analogy, Yeah, right. Yeah.
[24:55]There was no analysis of technology that you needed to do. A shovel was a shovel, a pick was a pick, a stake was a stake, and a pair of bridges uh before the improvement that Levi's brought in was a pair of bridges. Uh, you had to worry about logistics. How do you get the pick there? Stuff like that.
[25:17]But the analysis that you have to do to play the game today is, uh, analyzing competing technologies, uh, and that's I've learned at least, uh, much, much harder. I'm going to buy, uh, something with a symbol RIG. Uh, Global Marine, which is merging with their second largest competitor, uh, and will be not merely the largest but by far and away the largest provider of offshore drilling services. Uh, I'm going to do that because of hegemony in some basis that are getting some basins that are going to get drilled. Yeah. And the synergies involved in the elimination of duplicate overheads between these two companies. I'm going to do that. That's not a real sophisticated play for me. Right. The biggest and the best is something I can afford to own. Yeah. I'm going to own, well, I do own Schlumberger for the same reason. Probably, I should own Halliburton. Uh, but I'm not sure at $60 how much demand there's going to be for pressure pumping in the Permian and other basins. In other words, Halliburton's best days in terms of the pressure pumping business may be behind it. Mhm. And I see enough opportunity myself in Rig and Schlumberger that I don't need to own Halliburton. And I certainly don't need to come down the quality trail anymore because I'm competing with young analysts in Houston, who know those businesses inside out. Right. And they're going to kick my ass every day. Yeah. Well, that's exactly it.
[26:44]I, I, I would just stick to the big boys in this. Um, and I don't need to, uh, really, well, I can, but I don't really have to go any further down. Uh, Rick, talk a little bit really quick about, uh, people want to send you a portfolio for review. Talk about that. I've done it. It's a great service and it's a great value. It's free. Um, but uh, yeah, mention that real quick.
[27:07]Yeah, I've for 35 years, uh, I have personally ranked people's natural resource portfolio. I do it for free. By the way, I learn a lot, so I'm not trying to say I don't benefit. I learn a lot. ranking portfolios, but I do it for free. Works like this. You go to my website, ruleinvestmentmedia.com, and you list your natural resource stocks. Sidebar, Andy, no crypto, no tech stocks, no pot stocks, just natural resource stocks. And I'll I'll email you back the rankings. One being best, 10 being worst, I'll comment on individual issues like Schlumberger, as an example. If I think my comments might have value, Uh, that's absolutely free. The second step in a relationship with me is the rule classroom. There are over 300 hours of instructional classroom of instructional programming, ruleclassroom.com.
[28:50]Weekly question and answer sessions for free. Discussion groups for free. Other experts, Joe Mazumdar from the Exploration Speculator, Adrian Day, a lot of stuff there. 17,000 members, all free. Including five and a half hours on introduction to natural resource investing, which tells you how to do your own rudimentary securities analysis. So, you don't have to listen to the morons on Wall Street. Uh, and this is absolutely free. If you want a deeper dive at the rule classroom, there is uh a paywall section, uh, which gives you access to more stuff. But try before you buy. Go to the rule classroom. All of the stuff that you need to become a better investor is there. Try it for free. If you use it, then upgrade yourself to paid. Access better information. But it's not enough to want to use it. Go there for free. See if you actually use it or not. There's no particular point paying me $20 a month if you're not going to use the service. So, try it before you buy it, ruleclassroom. And then, once every 90 days, we do a deep dive into one topic or another in a boot camp. These are eight-hour long sessions. Don't come if you buy the Sunday paper for the funnies or the crossword puzzles. We work you very, very, very hard for eight hours on one topic, the idea being that we give you enough tools to make money in that topic. We've done silver, we've done uranium, we've done company types like prospect generators. We just did our first ever area play discussion of the Golden Triangle in Northern BC. These are very hard work. We give you more information in eight hours than you can absorb in eight hours, but you have access to the tapes for a year. $99, if you don't think you've got your money's worth, we'll give you your money back. But as I say, don't come unless you're prepared to work. Uh, this is very, very hard work. I'm delighted to say, Andy, and I think you know this, uh, we have money-back guarantees both on the conference and on the boot camps. And in 30 years of offering money-back guarantees on our investment education products, we've had to refund about 1/10th of 1% of the tuitions that we've charged. But the fact that we do offer it means that we have enough comfort and confidence in our content that we can afford to. I don't know of any other information service provider or conference provider who has an unconditional money-back guarantee. Yeah. Well, Rick, I want to thank you for that. We'll end on that. I just really I just really enjoy our time together. It's always a full, very full and you let me uh put you in the in the I don't want to say the hot box, but you let me rapid fire questions at you did. I think uh and you give so much great value back. So, I just really want to thank you for that. Uh, love to have you on again before the conference, but if I don't, I'll reach out to Kelly to get me on again. But if I don't, I'll see you at the conference and to all my viewers and listeners, it's it really is the best out there. This will be the best one we've done. And we've done a lot of them, so, enjoy it. Yeah. All right, thank you so much, Rick. Thank you.
