May has arrived and while my ultimate target for gold remains $2000+, technical and seasonal factors I’ve spoken about are now upon us.While I think it’s quite possible we push to $1,600 or higher in this move, those of you who fall under my previous middle of the road and speculator/gambler analogy would be wise to take some profits as we move towards and even above $1,600. This is not a sell signal like silver was at $49.25. However, unless as I previously noted your desires are strictly monetary, new gold ownership is not suggested at this time.

Brian Ostroff: Conflict Exposes Need for Phosphate Independence

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There’s more to fertilizer than potash, according to Windermere Capital Managing Director Brian Ostroff. He touts the value to be found in phosphate and offers his take on how the unrest in Africa, environmental concerns, global food prices and basic geology drive the phosphate market in this exclusive interview with The Energy Report.

Brian Ostroff: Windermere is an investment manager. We currently oversee two hedge funds with a natural resource focus. The Breakaway Strategic Resource Fund and the Navigator Fund are both offshore hedge funds based in the Cayman Islands. They are open-ended funds designed for high net-worth individuals and institutional investors. They are quoted on the Irish Stock Exchange, but subscriptions are done directly with the fund. Most of the people here have technical backgrounds as opposed to a financial or capital markets background. We have two partners in our fund—Ocean Partners, which is made up of the former ores and concentrate trading team at Pechiney and Peter Hawley and his group. These guys have all been in the business for +30 years, building and operating mines.

The other area where we think differently from other funds is that we are active investors. We tend to take fair-sized stakes in the companies in which we get involved. Then, we try to help the company going forward by making additions on its board, perhaps helping it operationally, assessing its assets and either helping the company divest or find other assets.

Finally, we are extremely value oriented. We tend to look at a company and assemble a peer group. We try to understand why a given company is trading considerably cheaper than similar operations, and then we identify the issues and how we could close the gap. After that, we have a discussion with management to see that we’re all on the same page. Once again, we are active—not activist. We have a meeting of the minds and when everyone is comfortable with the business plan, we tend to make our investment.

TER: Would you tell us about the differences in your two funds?

BO: The Breakaway Strategic Resource is mining only. Due to the technical expertise to which I alluded, the fund can make investments anywhere along the spectrum. Originally, we looked to buy distressed assets, even outright buying the properties or the mines. We do structured debt through our partners and offtake deals all the way through outright investment in the company’s equity. I like to describe Breakaway as a complete “rocks to stocks” investor.

TER: And what about Navigator?

BO: Navigator is all natural resources. Aside from mining, it also does energy and agriculture, paper and forest, etc. Its investments are primarily in publicly traded equities; however, we do have some room for near-public investments (i.e., those that we think can go public within about six months).

TER: Aside from precious metals, does the Breakaway Fund invest in other mining operations?

BO: We tend to have a place in our portfolios for niche commodities, or what I call the funky metals. That would be strategic metals, not necessarily rare earth elements (REEs) but things like graphite or vanadium.

We’ve become fairly involved in phosphate, which is a necessary component of fertilizer. Currently, potash is on the minds of most agricultural investors as the area has done very well. I think we may be going into a time when people will start to look at phosphate. There are a couple of important things to understand in the world of phosphate. First, there are two types of phosphate deposits. Most—probably 90%—are sedimentary; the rest are igneous.

Most of the world’s production comes from the sedimentary deposits. But they tend to have a lot of nasty contaminants in them. And due to the mineralogy of the sedimentary deposits, the concentrate that comes out is not as high as the concentrate that you can get out of igneous deposits. That can be a confusing factor for people who are not that familiar with the industry and the types of deposits. People will look at a 25% sedimentary phosphate deposit, and then look at an 8% igneous phosphate deposit and come to the erroneous conclusion that the 25% deposit is better than the 8%.

TER: But you would make a better margin on the igneous because you don’t have to purify out all the cadmium and uranium and such, right?

BO: Right. A sedimentary deposit might start at a 25% grade, but when you beneficiate it, you’re not going to get much higher than the low- to mid-30% range. Whereas, because of the mineralogy, you can beneficiate an 8% igneous deposit as high as 40% grade. What you really have to look at isn’t your starting grade, but rather what the concentrate will be and, ultimately, the price you will be able to get for the product.

The other interesting thing about the world of phosphate is that, right now, China is the largest producer, but it doesn’t export. The biggest player in the world of phosphate export is Morocco. Morocco comprises roughly 35% of the entire phosphate export market, which really makes the country the swing factor. Other players in the space include Jordan, Tunisia and Egypt. Given the turmoil in North Africa, that could present a big problem to the world.

Right now, North America runs a deficit in phosphate. We have to import it now and will continue doing so for the foreseeable future. Canada, while rich in potash, only has one operating phosphate mine—and that mine will probably deplete within the next two to three years. The other big phosphate areas in North America are Idaho and Florida. Both of these are sedimentary-type deposits, which brings environmental issues into play. In Florida, environmental problems have brought shutdown threats. One Florida mine operated by The Mosaic Company (NYSE:MOS) was shut down. It currently has a stay of execution, pending appeal. But, if that were to close, it would only exacerbate the deficit that North America runs.

In terms of pricing, phosphate is very different from things like gold and copper, which have a global price. Gold is gold and it’s at or above US$1,450/oz. everywhere in the world.

TER: You can’t arbitrage gold.

BO: Correct. Gold coming out of Chile, Australia, South America or Canada will get the same price in the open market; whereas, phosphate is a negotiated market. Contracts and things like location, transportation and quality of the concentrate are going to be the driving forces. That means pricing on all phosphate is not the same. The closest thing that we have to a benchmark is Moroccan FOB (freight on board), and that’s roughly US$150–$160 per ton.

At the end of the day, it all comes down to what’s the investment opportunity in phosphate? Our current view is that the world is quite aware of potash; potash stories have done extremely well and are actually quite numerous. Now, people are waking up to phosphate—and there are nowhere near as many opportunities in phosphate as there are in potash.

As investors start to understand the importance and the dynamics of phosphate, there will be increased investor demand. With considerably fewer situations to look at relative to potash, even a small shift out of potash into phosphate will have a pretty significant effect. I anticipate the sector, as a whole, will perform quite well.

TER: It also serves as a nifty hedge against falling dominos in North Africa.

BO: Absolutely. Supply security has become an increasingly important investment theme. Certainly, in the case of phosphate, it would be very important.

TER: Where does an investor take advantage of this opportunity?

BO: There are several names in the phosphate sector. Our fund is a large investor in a company called Ressources d’Arianne (TSX.V:DAN; OTCBB:DRRSF; Fkft:JE9N), more commonly referred to as Arianne Resources Inc. The company is based in Québec, so that addresses the security of supply. And it has easy access to the deprived North American markets.

As North American phosphoric acid producers for fertilizer start to look for more phosphate deposits in North America, Arianne will be very well situated. It’s close to infrastructure; an overload road that currently carries timber runs right through its property. It is within easy trucking distance of both a deep-sea port and the railway.

Arianne has an igneous deposit that yields a very pure concentrate, near 40% grade. The company already has a scoping study and it’s drilling to expand that resource. Arianne should have its prefeasibility report out sometime this summer and the original scoping study shows very healthy economics on this project. Actually, we find it is more advanced than most of the phosphate stories out there. It currently trades with just a US$60M market cap. This goes back to the question of where Windermere finds value. Relative to its peer group, Arianne is definitely at the bottom end with what we consider a superior asset.

TER: How long have you owned it?

BO: We’ve owned it for a little less than four months.

TER: Arianne’s stock is up almost five times over the past six months. Any stock would be due for a pullback after that. Yet, you still see this as a value play?

BO: Absolutely. For us, value is a relative matter. So, although the stock has performed very well and is up about fivefold over the last few months, it also has pulled back about 40% from its highs. Arianne has a US$60M market cap. The closest peer would be somewhere around a US$130M market cap, ranging all the way up to about a US$300M market cap.

TER: Arianne Resources produces many different metals in addition to its phosphate division, but you’re saying that phosphate is the mover, the catalyst for this company.

BO: Yes, Arianne owns exploration assets in other commodities but its main focus is the phosphate deposit. That is where the company is focusing 100% of its energy.

TER: In the first half of February, we saw some really unusual activity in Arianne’s shares; in fact, it was so pronounced that the company put out a press release saying it had no knowledge of any material change. Was this a manifestation of home gamers, day traders, do you think?

BO: No, I think what happened was that, when the agricultural cycle started to heat up again as a whole, people started to take a look at Arianne in light of our investment. They came to the same determination that we had, which was, relatively speaking, this company looks really, really cheap. As the stock started to appreciate, it gained momentum. More people saw the name and took the time to understand the situation. That continued to drive it.

TER: There was a lot of press at the end of 2010 and continuing into 2011 about the rising cost of food all over the world. I know that had an effect on fertilizer stocks—both phosphate and potash—but there was also anticipation of Lac à Paul deposit results. Do you think that could have been part of it, as well?

BO: Certainly, Arianne put out some results. Those numbers will be reincorporated into its resources numbers associated with the prefeasibility study. Previous drilling in that zone had been done only to 200 meters. The drilling that came out in February was down to the 400-meter level and showed the continuity of the deposit.

TER: Does Arianne own any of its own supply or processing chain?

BO: No, the company is in exploration mode. I think the prefeasibility study will start to determine what needs to be done to put this thing into production.

TER: And therein lies the value.

BO: Yes.

TER: Do you have another name for us in the phosphate sector?

BO: Yes. Going a little further down the chain, we are currently in the process of making an investment in a company called Glen Eagle Resources Inc. (TSX.V:GER), which is very, very early stage. Drilling on its property isn’t set to commence until sometime this summer. The company picked up a property, Lac Lisette, which is 40 kilometers away from Arianne’s property, attached by the same main road. Preliminary results from some grab samples seem to indicate a similar type of deposit; but, of course, until the drilling is done, it is a bit of a question mark.

TER: Obviously, you saw something in it that you liked. In fact, your investment philosophy is to be early.

BO: Glen Eagle’s proximity to Arianne, the fact that it is an igneous deposit in the same general macro-phosphate and proximity to infrastructure are advantages. And given the North American deficit in phosphate, we think there would be room for a couple of quality assets in that area.

TER: Those are a couple of good phosphate stories, Brian. Thanks for your time.

Brian Ostroff joined Windermere Capital, Inc. in 2009 and is a managing director. His area of focus is the junior and mid-tier mining sector. His previous experience includes a stint as a proprietary trader at a major Canadian bank and four years trading on his own. He also worked at the M&A advisory firm Goodrich Capital, where he was the Canadian managing partner overseeing mandates across a spectrum of industries with a focus on display technologies and mining. He worked at RBC Dominion Securities, where his focus was on smaller-cap special situations and alternative investments. Brian is a graduate of the University of Toronto. He can be reached at bostroff@windermerecapital.com, 514-908-4202.

Want to read more exclusive Energy Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Expert Insights page.

DISCLOSURE:
1) George Mack of The Energy Report conducted this interview. He personally and/or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Energy Report: None.
3) Brian Ostroff: I personally and/or my family own shares of the following companies mentioned in this interview: Arianne Resources. I personally and/or my family am paid by the following companies mentioned in this interview: None.
4) Windermere Capital (through its various entities) owns shares in Arianne Resources and Glen Eagle Resources.

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Compelling PM MicroCaps Series, Volume II: Caza Gold

Christopher Barker, Motley Fool Contributor – Blogging on Motley Fool CAPS as TMFSinchiruna

To kick-off this series in style, we’re going hunting for gold south of the border with Caza Gold (Caza is Spanish fort ‘the hunt’). Many of you have seen me refer to the company repeatedly since its IPO in late November, and now I aim to convey to you why this particular early-stage exploration company has attracted my attention to such a degree.

Caza trades on the Toronto Venture Exchange under the symbol CZY, and in the U.S. on the pink sheets as CZGDF.PK.

Often, when sifting through the overwhelming universe of microcap exploration companies in search of noteworthy standouts, the process involves something of a checklist that one must run through to ensure that a company meets one’s own parameters for what constitutes sensible investments in the space. For example, we Fools routinely emphasize the quality of management within a range of important selection criteria for stocks, but among early-stage exploration companies, this can often present something of an unknown entity. In the case of Caza Gold, however, Fools who are familiar with Endeavour Silver and the first-rate, proven management team behind it are encouraged to transfer that same degree of confidence in management to Caza Gold.

I can’t say enough positive things about the people behind this project. I had already owned Endeavour Silver shares for a few years, and developed considerable confidence in their management before I spoke with CEO Bradford Cooke last August. Through that conversation, however, and confirmed through all of my subsequent contacts with their staff, I have come to consider Endeavour’s management one of the most impressive teams in the business. And of course it never hurts that, in addition to being skilled exploration geologists with considerable business acumen to boot, they happen also to be some of the friendliest and most pleasant folks I’ve had the pleasure of communicating with in this industry. Bradford Cooke serves as Chairman of Caza Gold. Caza CEO Greg Myers has considerable experience under his belt, having served as a regional manager for Phelps Dodge, and as a project development manager for BHP Billiton. Mr. Myers took considerable time walking me through his perspective of the mineral potential at Caza’s various properties, and I found his own enthusiasm regarding the nature of these prospects very infectious. Caza director Tony Hawkshaw is the CFO of Rio Alto Mining, a stock that has enjoyed a very nice run of its own.

Has Caza’s gold already been snared?

Skilled hunters don’t wander aimlessly through the wilderness in hopes of a chance encounter. They rely upon detailed knowledge of their surroundings, a comprehensive understanding of their prey’s behavioural traits, historical knowledge of past encounters, and a mastery of reconnaissance techniques to target their prey in a way that is most likely to result in success. In the brief time elapsed since the company’s IPO, my review of the company’s chosen hunting grounds leads me to attribute a high likelihood of success to their ongoing quest.

We’ll begin with the Santiago property, which is located in the famed Batopilas district in Mexico, and only about 35km from Goldcorp’s El Sauzal mine along the same regional fault. Rock-chip sampling has returned grades as high as 30.3 gpt. The target here is a high-grade underground vein structure that the company considers capable of hosting a deposit of 500,000-oz. or more. After sampling in December discovered a new extension of the primary vein structure 400m NW of the known Cliff Zone veins, discontinuous surface sampling to date implies potential for a strike length of >1km. A 2,000 meter drilling program will be undertaken, with assay results forthcoming. With Endeavour Silver’s immense background working efficiently to unlock underground resources from high-grade vein structures, investors can anticipate that Caza will move swiftly toward production if exploration drilling continues to confirm the company’s present interpretation of the deposit.

Caza’s Moris property is the type of prospect that could easily justify an investment in these shares even if it were the company’s sole property. You all know how significant a deposit I consider Gammon Gold’s flagship Ocampo mine to be, and Caza Gold’s Moris property extends to within just a few kilometers of Ocampo. Nestled into another corner of the property’s boundaries is Hochschild’s prolific Moris Mine, and Caza believes that one of the four target areas on the property may represent an extension of that mine’s mineralized structure. The company believes that two of these targets alone — Balleza and La Cienega — form a 7km trend of veins and quartz stock work that may be capable of hosting a significant amount of gold in a bulk mineable deposit. As in the case of the 500,000-ounce target noted above for Santiago, these figures are early-stage guidelines for strategic planning that have yet to be confirmed through expansive exploration drilling. Unlike many of the optimistic assessments of mineral potential that I remind Fools to remain skeptical of under most circumstances, my degree of respect for Caza’s management team leads me to take these informal assessments seriously. Caza has drawn intriguing geological comparisons between the Moris property and Minefinders’ Dolores property.

Have I mentioned that Caza’s present market cap is just over $20 million?

Although Caza set out to hunt for gold with an emphasis on Mexico in order to capitalize on management’s extensive regional expertise, I believe the company’s move to acquire the Los Andes project in Nicaragua epitomizes the opportunistic nature that any skillful hunter must also possess. Here again, because Caza has only just recently acquired the property and initiated surface mapping and sampling, we cannot yet ascribe a high degree of scientific certainty to the exact extent or characteristics of the deposit, but as I understand the strong initial geological indicators of the site’s mineral potential, it must be stated that Los Andes shows very exciting potential to develop into a world-class gold mine as exploration work proceeds over time. Caza is targeting a multi-million-ounce deposit at Los Andes, and recently staked 11 new properties along the same gold belt that display similar geological characteristics.

According to their website: “The Los Andes high sulfidation gold system is exposed on surface as an extensive alteration zone of hydrothermal vuggy quartz, pervasive silification, and alunite associated with highly anomalous gold, silver, and trace elements.  The alteration zone covers a 45 square kilometer area and measures 12 kilometers long by up to 6 kilometers wide.  It is similar in size, nature, intensity, and trace element geochemistry to world class gold deposits such as Yanacocha and Pierina in Peru.” As we saw above with the Moris Mine, Caza’s Los Andes property also enjoys a strategic location flanked by existing mines. Los Andes sits between the locations of B2Gold’s producing mines on the Central Nicaragua Gold Belt.

“High sulfidation gold systems are important sources of precious metals throughout the world and are some of the largest gold producers.  The geologic setting, geochemical signature, and alteration patterns are well documented.  The extremely large alteration zones versus the much smaller footprint of the economic mineralization are a challenge during exploration presenting the classic “needle in a haystack”.  A well thought out and systematic exploration plan is required.  Many of the world class deposits have been well studied and the understanding of alteration and geochemical patterns will add greatly to exploration efforts at Los Andes.”

In other words, while the company is clearly excited about the potential to pinpoint a significant, economic gold deposit within this property, they also acknowledge that considerable exploration effort may be required to advance the property toward that ultimate goal of production. I would not be at all surprised to find some of the gold industry’s big dogs eventually approaching Caza with respect to facilitating an optimal scale of exploration resources brought to bear on the site.

Conclusion:

Provided the risks common to all microcap precious metal exploration companies are well understood, and the speculative nature of the wager is properly grasped, I consider Caza Gold among the more superbly positioned stocks in the space based upon the exciting initial indicators of potential mineral wealth buried beneath its properties. Along with my own very considerable confidence in the character and the expertise of the company’s management, the perceived potential for two of the company’s three project areas to host multi-million-ounce deposits renders this explorer particularly exciting. The location of all three properties within the vicinity of proven gold-bearing ore structures, and along the axes of significant geological trends in common among those mines, I believe that Caza sits upon a high probability of success for confirming the existence of gold in economic deposits.

While the Santiago and Moris properties offer entirely sufficient avenues for potential exploration success to render the stock a strong speculative play in its present price range, the added prospect that a truly world-class gold deposit could be identified through exploration at Los Andes gives the stock’s potential payout the sort of high-octane boost that I’m looking for among my selections in the microcap space. If just one of these three properties were to make good on just half the currently targeted mineral potential of that site, I believe we would find a sufficient catalyst for meaningful share price appreciation. If all three were to hit in a solid gold trifecta, those returns could quickly turn legendary.

As with any early-stage exploration company, there are more guesses than guarantees involved; but, particularly for a company with no officially established resources on the books, the strength of Caza’s prospects yield an uncommonly compelling risk/reward ratio for a play of its type.

For more information, please spend some time exploring Caza’s website at cazagold.com. A careful inspection of the company’s presentation, accessible from the home page, is recommended.

Disclosure: I own shares of Caza Gold, Endeavour Silver, Gammon Gold, Goldcorp, and Minefinders.

The article above is part of an on-going series on precious metals microcap companies. As a service to the author the following link is a prelude to the series for the reader’s information. http://caps.fool.com/Blogs/compelling-pm-microcaps/563967

AH PERFECTION: Strange, but the most popular, the most widely-requested, and the most widely quoted piece I’ve ever written was not about the stock market — it was about business, and specifically about what I call the theoretical “ideal business.” I first published this piece in the early-1970s. I repeated it in Letter 881 and then again in Letter 982. I’ve added a few thoughts in each successive edition. But seldom does a month go by when I don’t get requests from subscribers or from some publication or corporation to republish “the ideal business.” So here it is again — with a few added comments.

I once asked a friend, a prominent New York corporate lawyer, “Dave, in all your years of experience, what was the single best business you’ve ever come across?” Without hesitation, Dave answered, “I have a client whose sole business is manufacturing a chemical that is critical in making synthetic rubber. This chemical is used in very small quantities in rubber manufacturing, but it is absolutely essential and can be used in only super-refined form.

“My client is the only one who manufactures this chemical. He therefore owns a virtual monopoly since this chemical is extremely difficult to manufacture and not enough of it is used to warrant another company competing with him. Furthermore, since the rubber companies need only small quantities of this chemical, they don’t particularly care what they pay for it — as long as it meets their very demanding specifications. My client is a millionaire many times over, and his business is the best I’ve ever come across.” I was fascinated by the lawyer’s story, and I never forgot it.

When I was a young man and just out of college my father gave me a few words of advice. Dad had loads of experience; he had been in the paper manufacturing business; he had been assistant to Mr. Sam Bloomingdale (of Bloomingdale’s Department store); he had been in construction (he was a civil engineer); and he was also an expert in real estate management.

Here’s what my dad told me: “Richard, stay out of the retail business. The hours are too long, and you’re dealing with every darn variable under the sun. Stay out of real estate; when hard times arrive real estate comes to a dead stop and then it collapses. Furthermore, real estate is illiquid. When the collapse comes, you can’t unload. Get into manufacturing; make something people can use. And make something that you can sell to the world. But Richard, my boy, if you’re really serious about making money, get into the money business. It’s clean, you can use your brains, you can get rid of your inventory and your mistakes in 30 seconds, and your product, money, never goes out of fashion.”

So much for my father’s wisdom (which was obviously tainted by the Great Depression). But Dad was a very wise man. For my own part, I’ve been in a number of businesses — from textile designing to advertising to book publishing to owning a night club to the investment advisory business.

It’s said that every business needs (1) a dreamer, (2) a businessman, and (3) a S.O.B. Well, I don’t know about number 3, but most successful businesses do have a number 3 or all too often they seem to have a combined number 2 and number 3.

Bill Gates is known as “America’s richest man.” Bully for Billy. But do you know what Gates’ biggest coup was? When Gates was dealing with IBM, Big Blue needed an operating system for their computer. Gates didn’t have one, but he knew where to find one. A little outfit in Seattle had one. Gates bought the system for a mere $50,000 and presented it to IBM. That was the beginning of Microsoft’s rise to power. Lesson: It’s not enough to have the product, you have to know and understand your market. Gates didn’t have the product, but he knew the market — and he knew where to acquire the product.

Apple had by far the best product in the Mac. But Apple made a monumental mistake. They refused to license ALL PC manufacturers to use the Mac operating system. If they had, Apple today could be  Microsoft, and Gates would still be trying to come out with something useful (the fact is Microsoft has been a follower and a great marketer, not an innovator). “Find a need and fill it,” runs the old adage. Maybe today they should change that to, “Dream up a need and fill it.” That’s what has happened in the world of computers. And it will happen again and again.

All right, let’s return to that wonderful world of perfection. I spent a lot of time and thought in working up the criteria for what I’ve termed the IDEAL BUSINESS. Now obviously, the ideal business doesn’t exist and probably never will. But if you’re about to start a business or join someone else’s business or if you want to buy a business, the following list may help you. The more of these criteria that you can apply to your new business or new job, the better off you’ll be.
(1) The ideal business sells the world, rather than a single neighborhood or even a single city or state. In other words, it has an unlimited global market (and today this is more important than ever, since world markets have now opened up to an extent unparalleled in my lifetime). By the way, how many times have you seen a retail store that has been doing well for years — then another bigger and better retail store moves nearby, and it’s kaput for the first store.

(2) The ideal business offers a product which enjoys an “inelastic” demand. Inelastic refers to a product that people need or desire — almost regardless of price.

(3) The ideal business sells a product which cannot be easily substituted or copied. This means that the product is an original or at least it’s something that can be copyrighted or patented.

(4) The ideal business has minimal labor requirements (the fewer personnel, the better). Today’s example of this is the much-talked about “virtual corporation.” The virtual corporation may consist of an office with three executives, where literally all manufacturing and services are farmed out to other companies.

(5) The ideal business enjoys low overhead. It does not need an expensive location; it does not need large amounts of electricity, advertising, legal advice, high-priced employees, large inventory, etc.

(6) The ideal business does not require big cash outlays or major investments in equipment. In other words, it does not tie up your capital (incidentally, one of the major reasons for new-business failure is under-capitalization).

(7) The ideal business enjoys cash billings. In other words, it does not tie up your capital with lengthy or complex credit terms.

(8) The ideal business is relatively free of all kinds of government and industry regulations and strictures (and if you’re now in your own business, you most definitely know what I mean with this one).

(9) The ideal business is portable or easily moveable. This means that you can take your business (and yourself) anywhere you want — Nevada, Florida, Texas, Washington, S. Dakota (none have state income taxes) or hey, maybe even Monte Carlo or Switzerland or the south of France.

(10) Here’s a crucial one that’s often overlooked; the ideal business satisfies your intellectual (and often emotional) needs. There’s nothing like being fascinated with what you’re doing. When that happens, you’re not working, you’re having fun.

(11) The ideal business leaves you with free time. In other words, it doesn’t require your labor and attention 12, 16 or 18 hours a day (my lawyer wife, who leaves the house at 6:30 AM and comes home at 6:30 PM and often later, has been well aware of this one).

(12) Super-important: the ideal business is one in which your income is not limited by your personal output (lawyers and doctors have this problem). No, in the ideal business you can sell 10,000 customers as easily as you sell one (publishing is an example).

That’s it. If you use this list it may help you cut through a lot of nonsense and hypocrisy and wishes and dreams regarding what you are looking for in life and in your work. None of us own or work at the ideal business. But it’s helpful knowing what we’re looking for and dealing with. As a buddy of mine once put it, “I can’t lay an egg and I can’t cook, but I know what a great omelet looks like and tastes like.”

Read Richard Russell’s Rich Man Poor Man (The Power of Compounding) HERE

Read about Richard Russell’s famous service HERE

Read more Popular articles by Richard HERE

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