Page 28 - What is the Squad List?

You’ve decided what asset class you want to invest in and how you want to invest, but you still need a strategy.
Imagine a fully laden ship which is in perfect working order but it’s got no destination (strategy), it’s unlikely to deliver its cargo. This is why step 3 is so important; you’ve worked out what you want to invest in and how you want to invest (funds, companies etc)– but you must have an end goal. A strategy. Without this your portfolio is unlikely to deliver what you want it to do.
You’ve got your list of companies and perhaps some funds....but what’s your strategy? What are you trying to achieve?
If you look at your piece of paper, you’ve probably got far too many players (and funds), or perhaps there is “an imbalance” - lots of goalkeepers and no forwards.
Like a football manager, you then need to decide on a strategy and pick investments to deliver that. Which is what step 3 is all about.
Going back to the positions (and remember, I’m talking about mining companies). The largest multi-national miners are my goalkeepers. They tend to be large companies (often with market values over $10bn) that produce several different commodities, so I would view them as lower risk.
Next up are the defenders. Again, these are large companies, but they’re often focused on one country or commodity, so higher risk.
Midfielders are new to production and invariably focused on one commodity. After a while (several years), I would hope that they’d become defenders, but until they’ve proven that they have fully transitioned from an explorer to a producer, I tend to keep them in this category.
Then it gets really interesting. The forwards can deliver some life-changing returns (such as Chalice, which went up over 65X), but they’re very high-risk. So, although it may make sense to have some in your portfolio, you need to be careful. I’d view them as the “icing on the cake”, I want the other positions to deliver so I’m not stressing about my forwards.
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