Most retail investors believe the path to riches in junior mining and energy runs through one of two doors: correctly forecasting where the oil price lands next quarter, or being first to spot the next monster discovery before the crowd arrives.

Both assumptions are wrong, and holding them is how portfolios get destroyed.

Malcolm Shaw, co-founder and publishing director of The Circle newsletter and a partner at Hydra Capital Partners, has spent close to two decades in the resource trenches. He runs a live portfolio of 50 to 60 positions through the brutal boom-and-bust cycles that define the sector, and his method does not depend on predicting anything.

His approach rests on a different…