- According to Rule, the biggest determinate of long-term investing success is mastering human nature and the psychology that governs investment decisions
- Emotion frequently overrides logic once money is involved
- “Financial markets are the only markets in the world where customers leave the store when then sale starts”, Rick Rule
- Successful investing depends on consistently acting in ways human nature resists
After reviewing nearly 100,000 investment portfolios over three decades, veteran resource investor Rick Rule has reached a conclusion that may surprise investors searching for the next big trade. The biggest determinant of long-term success isn’t finding the perfect stock. It’s mastering the psychology that governs every investment decision.
For decades, Rick Rule has occupied a unique position in the natural resource investment world. Known for his deep understanding of mining, energy and commodity markets, he has spent his career studying not only companies and balance sheets, but the people investing in them.
This article is a journalistic opinion piece that has been written based on independent research. It is intended to inform investors and should not be taken as a recommendation or financial advice.
Investor psychology insight
His greatest education, however, may not have come from the markets themselves.
“I think they come from two places,” Rule says when asked where his best investment insights originate. “One is reflecting on the mistakes I’ve made over my career. There’s no lesson that one learns as well as one that applies a cost on you.”
The second source is even more remarkable.
“I have graded almost 100,000 portfolios in 35 years. I offer a service where people can submit their natural resource portfolios to me, and I rank them for free. While I hope that I’ve taught a lot of lessons over the last 35 years, I’ve learned an awful lot about investor behaviour simply from ranking now almost 100,000 portfolios.”
Those thousands of portfolios have revealed patterns that transcend market cycles, commodity booms and recessions. According to Rule, investors continue making the same psychological mistakes generation after generation.
Why investors buy at exactly the wrong time
Ask Rule what behavioral pattern appears most consistently, and the answer comes quickly.
“The themes are timeless. Most people are anti-contrarian.”
In sectors like mining and energy, where markets are highly cyclical, Rule argues that success requires doing what feels emotionally uncomfortable and not aligned with human nature.
“You have to buy a specific commodity or a specific commodity producer when it’s out of favour, and hold it until the time that it comes back into favour. When it comes back into favour, you can’t be seduced by the price action. You have to sell.”
Simple advice—yet extraordinarily difficult to follow.
Rick Rule suggests that rather than buying assets when pessimism dominates, investors often wait for confirmation that prices are already rising. By then, much of the opportunity has disappeared.
To explain this contradiction, Rule reaches for an analogy that almost everyone can understand.
“Financial markets seem to be the only markets in the world where all the customers leave the store when the sale starts.”
Consumers naturally seek discounts when purchasing clothing, appliances or cars. Investors, however, often become fearful when quality assets become cheaper.
“I suspect if people bought stocks more like they buy coats, they would enjoy better performance.”
The comparison is humorous, but the lesson is profound. Emotion frequently overrides logic once money is involved.
Patience is more valuable than prediction
Rule believes another persistent weakness among investors is a mismatch between their investment strategy and their behavior.
“Most people have a time preference that doesn’t correspond to their strategy.”
An investor might purchase a copper producer believing copper prices will strengthen over five years, yet become anxious after a few volatile trading sessions.
“The most important aspect of financial performance is simply compounding over time, and if you aren’t patient, you can’t enjoy compounding.”
That lesson is supported by his own investment history.
Rule once examined the biggest winners of his career—investments that returned more than 1,000 percent.
“The average 10-bagger in my portfolio took about six years to achieve that.”
Perhaps even more surprising was what happened along the way.
“Almost every 10-bagger in my portfolio exposed me at some point in time during the time I held the stock to a 50% share price decline.”
For investors who measure success by daily price movements, those drawdowns can feel catastrophic. For Rule, they are often part of the journey.
“If you don’t have an opinion as to the value of a company, you can’t psychologically sustain a 50% share price decline and keep the stock.”
Understanding intrinsic value, he argues, transforms volatility from something to fear into something to evaluate.
The difference between stories and facts
Markets thrive on narratives.
Artificial intelligence, social media and financial news deliver an endless stream of opinions explaining why prices should rise or fall. Rule worries investors increasingly mistake compelling stories for sound analysis.
“People pay too much attention to the narrative, the story, and not enough attention to the facts.”
Facts, he says, begin with management quality.
In speculative industries, exceptional leadership consistently separates long-term winners from the rest of the market.
Drawing on the concept commonly known as the Pareto Principle, Rule argues that a tiny percentage of management teams create a disproportionate amount of shareholder value.
“What I’ve learned in my life is that, 1% of the population generates 40% of the utility.”
Looking back, he admits his own investing career could have been significantly simpler.
“If I had, for the 50 years I’ve been involved in markets, invested with only the people who made me good money in my first 10 years, I would’ve worked a quarter as hard and made twice as much money.”
Instead of constantly searching for new stories, Rule says investors should identify proven operators and stay within that circle.
Learning from expensive mistakes
Rule doesn’t present himself as someone who avoided failure.
Quite the opposite.
He openly credits many of his best investment principles to painful experiences early in his career.
“I came into the resource business in the decade of the ’70s, which was easily the most benevolent period in human history for resource investing.”
Like many young investors experiencing a powerful bull market for the first time, he confused favorable conditions with exceptional skill.
“I conflated a bull market with brains.”
Eventually, reality arrived.
“I overstayed my welcome, and my net worth briefly went below zero.”
Those losses permanently changed how he responds to markets that appear unstoppable.
“When life gets too easy now, I remind myself of how much money I lost by being complacent.”
Today, when charts become parabolic, Rule’s instinct is no longer excitement.
It’s caution.
“I’ve trained myself to sell hyperbolic up moves.”
Conversely, dramatic declines often create opportunity.
“If I’m interested in the sector, hyperbolic down moves, I’ve trained myself to buy.”
That discipline runs directly against natural human instincts.
“It’s difficult to look at a stock chart where it looks like the trajectory of a boulder thrown off a bridge and buy the stock.”
Yet history has repeatedly rewarded investors willing to act when others cannot.
Hard work still matters
For investors hoping technology will replace research, Rule offers a reality check.
“If making money, particularly as a speculator, is important, understand you have to put in the time. You have to do the work.”
He frequently encounters investors holding dozens—or even hundreds—of speculative companies while spending only a few hours each month researching them.
“You can’t know the companies, especially the speculative companies, spending that little time.”
Those unwilling to commit the effort should adopt a different investment approach rather than attempting speculation without preparation.
“If you don’t do the work, do something sensible with your money. Don’t consign yourself to defeat by your own inaction.”
AI is a tool – not a substitute for judgment
Although Rule identifies himself as an investor rather than a trader, he is enthusiastic about artificial intelligence.
He also offers one of the interview’s most memorable observations.
“I need to caution them that AI used improperly stands for artificial ignorance.”
The technology, he explains, is exceptionally powerful when asked the right questions.
“AI can do what would take me four weeks to do on a single company, and it can do it in two minutes.”
The key lies in directing AI toward reliable information.
Audited financial statements, regulatory filings and structured datasets offer meaningful analysis.
Social media opinion does not.
“You have to ask AI questions that it is good at answering, and you have to constrain the search to datasets that you think have a high probability of being real.”
Technology can accelerate research, Rule believes, but it cannot replace critical thinking.
Rick Rule’s real edge
Across decades of market cycles, thousands of portfolio reviews and countless conversations with investors, Rule has reached a surprisingly simple conclusion.
Successful investing rarely depends on discovering information nobody else possesses.
Instead, it depends on consistently acting in ways that human nature resists.
Buying quality assets when others are fearful.
Holding positions long enough for compounding to work.
Separating arithmetic from narrative.
Learning from mistakes instead of repeating them.
Markets evolve. Technologies change. New investment themes emerge.
Human psychology, however, remains remarkably consistent.
And for Rick Rule, understanding that psychology may be the most durable competitive advantage any investor can develop.
For more Rick Rule, check out Rick’s previous segment on the economy, critical minerals, “We’re in a New Era” as well as his advice on investment reads and Wise advice from ‘The Intelligent Investor‘.
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