“Paddle your own canoe” Noah — Many Years Ago Review.

Noah being a sensible sort of chap, never made an investment without first consulting his weather charts. They, plus the inevitable good advice from upstairs, told him that the best investment he could make would be in a shipbuilding company.

Like all insiders he immediately passed this gem on to his friends who totally ignored it, but he built one boat anyway.

There are two points. Firstly, rain was none too prevalent and Noah was miles from the sea. Secondly this was many years before the advent of the Financial Securities Act. His friends could easily be forgiven for believing he was merely trying to talk up the price of what looked a very bad investment.

Soon after came the great flood, and lo and behold Noah successfully floated his entire company. Our analysts tell us, his was the only family left on earth.

Of course Noah invested in something that no one else wanted. He had invested against the tide of investor opinion in our equivalent of an unfashionable share. When that tide turned, Noah’s commodity, namely a boat, was exactly what everyone wanted.

But they were too late — there were none left, and the performance of Noah’s investment was the envy of the world. That investment was the one thing that kept him and his family afloat when everyone else was sinking.

In 1988 things are not that different. In terms of our “weather charts” base metals shares are a good investment although they are currently unfashionable. One does not have to be an insider to see that the metal oversupply which hit the market in the late 1970s is not occurring again. Phelps Dodge is on a ridiculously low price-to- earnings ratio of 4-to-1 and Alcan is 5.5-to-1. At the moment the tide of investor opinion is running against them.

“Not interested in commodities,” say investors. “Too cyclical.”

But what if they are wrong?

We believe that base metal prices will remain at these levels for some time to come and the earnings and cash generation of those companies involved will be phenomenal.

We believe that when people realize how cheap the shares are, those of you who went for value will leave those who didn’t, high and dry.