To The Moon

🎯 When the Hype Fades: The Rise and Fall of the Rare Earths Trade

After reports of smooth U.S.–China negotiations and Beijing’s assurance that it wouldn’t impose export controls on rare earths, related stocks plunged across the board — many collapsing to levels below where the rally began.

Few sectors illustrate the difference between speculation and investment as vividly as rare earths. This episode laid bare the market’s mania, fear, and the psychology of FOMO-driven trading.

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🚀 Phase One: A Party Fueled by FOMO

It all started with one headline rich in imagination:

> “China may restrict rare earth exports.”

For most investors, “rare earths” is a familiar yet vague term — something crucial, geopolitical, even mystical. That was enough to ignite a frenzy.

Money flooded in. I’d wager most buyers didn’t even know the full names or actual businesses of the companies they were buying. They weren’t investing in a business — they were chasing a story, a ticker symbol, a quick fortune built on “export control” headlines.

At that stage, no one cared about fundamentals, valuations, or profits. It was pure momentum trading — prices rising simply because they were rising.

Momentum isn’t inherently bad. But the danger comes when traders convince themselves they’re investing — when they forget they’re surfing emotion, not analysing value.

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💥 When the Music Stops

And eventually, it always does.

Once U.S.–China talks progressed and the export threat faded, the market’s only support — sentiment — evaporated. Prices reversed sharply, falling faster than they rose.

Why? Because every trader who bought mid-rally suddenly became a desperate seller. With the story gone, there was no reason to stay.

The FOMO-fueled party ended as it always does — with panic, regret, and losses.

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🧭 When Speculators Exit, Investors Begin

But for a true investor, this is when things finally get interesting.

When the noise fades, you can ask the right questions — the ones that actually matter:

1. Has the geopolitical foundation changed?

The U.S. remains committed to securing an independent rare-earth supply chain. That’s not a headline — it’s a decade-long national strategy. Nothing about that has changed.

2. Has the company’s moat eroded?

MP Materials is still the only U.S.-based company with full “mine-to-magnet” integration. Its strategic uniqueness hasn’t disappeared — if anything, it’s become more visible.

3. Is government backing still real?

The U.S. Department of Defense still holds a stake and continues to offer contracts and floor-price guarantees to stabilise profitability. Those supports don’t vanish because of one news cycle.

All three answers are, to me, crystal clear: the long-term story remains intact.

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🌱 After the Noise, the Patience Test

I welcome this correction. It flushed out the fast-money crowd and pulled prices back to levels worthy of real analysis.

That said, let’s be objective:

MP Materials is still loss-making, and the road from mining to magnet manufacturing is long and capital-intensive.

With momentum gone, the stock could consolidate at the bottom for months — testing every investor’s patience.

So no, this isn’t a “buy blindly” moment.

It’s a “start doing your homework” moment.

When everyone else has moved on to the next shiny theme, that’s when serious investors quietly get to work — reading filings, tracking progress, and assessing intrinsic value.

Because true investing has never been about chasing noise.

It’s about waiting, quietly, for value to take root.

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