TGR: Vanadium is a metal that's really hot right now due to its potential for use in batteries in place of lithium.

You have a position in the vanadium play Largo Resources Ltd. (TSX.V:LGO). How did you get involved there?

ST: Largo is a company I had traded several years ago. When we were launching the fund, Largo needed to raise capital to exercise an option on a vanadium project in Brazil. Mark Brennan, who runs Largo, was a friend and I knew the company had this capital need coming up and felt it would be doing an offering. We thought the market was not giving them credit for the potential value of those deposits. We made our initial investment in December 2008 and we did a follow-up round at higher valuations. We are big believers in vanadium. Mark and his team have really been scrappy underdogs at several points in this story. In the end, it's going to work out very well for Largo and its shareholders.

TGR: Does the fact that there are almost 300 million shares outstanding reduce the upside potential?

ST: Yes and no. A simplified capital structure would attract more institutional interest, but on the other hand, a lot of people might stay away. That may have led to some inefficient pricing and could present an opportunity. Large share counts are becoming less of an issue because it's increasingly common to have these nine-digit share counts in Australia, Canada and Singapore. I think there's less of a stigma associated with that.

TGR: Is the amount of liquidity in that stock to your liking?

ST: It trades 1.5 million shares a day. That's fine. Having a three-year lockup lets us ease in and out. Sometimes it can take a while to build a position or to exit a position.

TGR: Do you have some parting thoughts for us on what's going on in the market and where you see it heading in the next 6–12 months?

ST: It really continues to be a stock-pickers market, just like the period of 1966 to 1982 when the broad averages essentially went nowhere to down. I think we've been in a similar period since 2001. The indexes may remain flat for several more years.

Beneath the surface, there are tremendous opportunities to find companies that have terrific stories and are making things happen. As a portfolio manager, when I look at the situation in a macro sense, it's easy to get depressed. But when I look at the portfolio from a bottom-up perspective, company by company, individual story by individual story, I see a lot of reasons for optimism. I see companies doing great things and applying new technology. Looking ahead, I think that's what may surprise people. Technology will play a huge role in the resurgence of the U.S. and Canadian markets. There are too many people wringing their hands, saying the sky is falling and the U.S. is falling apart. I respectfully disagree.

TGR: Thanks, Stephen.

Steve Taylor is chairman and CEO of Taylor Asset Management, a Chicago-based investment management firm focusing on small-cap domestic equities and emerging markets. He also serves as a portfolio manager for the Taylor International Fund, Ltd., a small-cap equity fund. In addition to emerging markets, Steve's area of expertise includes private equity, restructuring and turnaround situations and both small- and mid-cap companies. He has considerable experience in the natural resources and finance industries in Canada and China.

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