China's Tungsten Squeeze Cost Us

If you've ever held a position that went down while everything you knew about the company kept getting better, you've run into one of the hardest questions in this business.

Is this thing wrong, or is it just early?

Getting it wrong in either direction is expensive.

Sell a good company into a sentiment washout, and you eat the loss and miss the recovery that follows.

Hold a broken one because you're anchored to what you paid, and you ride it down to nothing.

Here are the four rules we use to tell the two apart.

I'm going to use two of our own losing positions to show you how they work.

A mine restarts, its metal is up 550%, and the stock falls 40%

A tungsten mine that sat idle for decades came back into production this year.

The company started feeding a stockpile of well over 100,000 tonnes of ore through its newly commissioned processing plant this summer, and it was added to major stock indexes, which forces index funds to buy the shares whether they like the story or not.

European ammonium paratungstate, the benchmark for the metal it sells, trades above $3,100 per metric ton unit. Since China imposed export controls in early 2025, the price has climbed more than 550%.

And yet, the stock is down about 40% from where we recommended it.

We own a copper explorer in the same position.

Since we bought it, the company extended its high-grade zone and hit intercepts grading over 4% copper equivalent. Copper has gained 46% over the past year. That stock is down about 40% too.

We bought the tungsten producer at a valuation that assumed years of flawless execution. The market has since decided to pay less for that same set of assumptions.

The business improved, the multiple compressed, and the multiple moved faster. The copper explorer is the same story.

That's sentiment repricing, and it looks identical to a broken thesis in your account.

Rule one: size it so being wrong is survivable

This is the real risk control, and almost nobody treats it as one.

When we recommend an early-stage company that could realistically fall 60% or more, we tell you to hold it at 1% to 2% of your risk money.

Put $1,500 into a company like that and a 40% collapse costs you $600. It's an annoyance you read about on a Tuesday and forget by Thursday.

Put $15,000 into the same company and that identical 40% move costs you $6,000, and you will sell it at the bottom because you cannot sleep.

The company didn't change. The position size did.

Rule two: write down what would prove you wrong before you buy

The thing to write down is an event.

A permitting denial. A capital raise struck far below market. The underlying commodity rolling over toward the price its competitors can produce at.

Name the specific things that would tell you the story died, and name them while you're calm, because you will not think clearly about them later.

Rule three: a stop is an alarm clock

When one of our positions breaks its stop level, that's the signal to dig in.

It means we owe you a fresh look at the thesis and a published verdict, either the specific reasons it still holds or a sell alert with the reasoning attached.

Selling automatically on a price level in a small resource stock guarantees ordinary volatility shakes you out.

Ignoring the level entirely is how people end up holding a bag and calling it conviction.

The discipline lives in between, and it only exists if somebody does the work when the alarm goes off.

Rule four: sell half at a double and ride the rest free

When a position doubles, we sell half. It’s our Moonshot Ride.

Every original dollar comes back to you and the rest runs on the market's money.

Seven of our open positions have been through that.

We hold them today at zero cost basis, which means no price on any screen can take back what we already banked.

Here’s one example. Last year we recommended a critical minerals company.

Fifty days later it had gained 140% and we sold half, returning the entire original stake plus a gain.

That remaining half is slightly underwater today.

It shows red in the portfolio, but it has cost the holder nothing, because every dollar still in the trade came from the market.

Where we are right now

I'm reviewing every underwater position we hold against the specific conditions we published on the day we recommended it.

At least one is going to conclude I got something wrong.

Two of the companies I'm reviewing are expected to report earnings within days.

My read on them could change almost immediately after I publish.

I'd rather hand you my thinking now with that caveat attached than hold it two weeks so it arrives looking more certain than it is.

What you can't do with what I just gave you

Everything above is yours whether you ever pay me a dollar.

The four rules work on any portfolio, even if you don’t follow any of our recommendations.

Go apply them tonight.

You now have a method for separating a drawdown from a broken thesis.

For Premium Members, it’s a little different. Every recommendation they get arrives with the position size stated before the buy, the specific events that would prove it wrong, and the level that triggers a review. When one of those levels breaks, they get the review in writing, whether the verdict is hold or sell.

Our winners have run about 2.5 to 3 times as large as our losers.

Seven open positions have doubled, returned their entire original stake, and now ride on the market's money. Our best open position is up 184%.

And later this week they get the full review.

Every underwater position, a verdict on each, and next steps.

Double D

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