Rick: The third thing I would suggest to readers – and I've alwaysadmired Doug Casey for this – is knowing that volatility isn't a risk, it's a tool. Resource stocks are hyper volatile. There are stocks that vary between $1.30-1.70 in the same fashion that you and I inhale and exhale. That type of volatility occurs for no foreseeable reason. For example, a $25-30 million market cap company may have a $4-5 billion institution as a 9% shareholder. If that institution experiences disintermediation and has to sell the stock, then that 9% can hit the market for no reason that has anything to do with the company or its prospects. That type of selling can knock a stock down by 30-40% in a single trading day. Many speculators, as a consequence of the stock going down for reasons that they don't understand, join the selling stampede. And you can literally have one of these stocks sell off 50%, for no reason that has anything to do with the value of the company. This is, of course, an opportunity rather than a risk. But it's only an opportunity if the speculator is temperamentally and intellectually prepared to take advantage of it.

L: I've seen that happen. Somebody decides to dump a whack of shares, that triggers stop-loss selling, and the thing just cascades, totally out of the blue. But yes, you have to screw up your courage and buy when others are selling. There's one company in our portfolio that we've doubled our money on twice – and the stock is still roughly the same price it was when we first recommended it.

Rick: [Laughs] That's wonderful. And the thing that amuses me is that most speculators regard this as a bad thing – you know, the fact that you get periodic "50% off" sales. They focus too much on the price of the stock without any regard to its value. If you don't have any idea of the value of something, price information is of no consequence.

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