NEW YORK ( TheStreet) -- Rare earth stocks Thursday sold off quickly. The timing was perfect as I wrote a bullish article on this sector, suggesting that these stocks had further to run. For those who are invested in this space or are looking to add exposure, days like Thursday, when many of these stocks were off 10% or more, are a great time to add exposure.

This is still a high-risk/high-reward area to invest. Make no mistake -- the mania surrounding rare earths is not purely driven by supply demand fundamentals.

I wrote the other day: Despite their name, rare earth elements are not all that rare on earth ... What's really rare about rare earth elements is finding concentrated mineral deposits where it's economically feasible to harvest them -- that's the challenge.

And in October I wrote: It's a high-risk/high-reward sector to invest in. But if you have the risk-capital to utilize, it's worth rolling the dice when the table is tilted in your favor. Knowing when that is, well, is anybody's guess. This kind of high-risk, high-reward scenario is the nature of speculation.

The eye-popping runs of these stocks is providing the media no shortage of attention-grabbing headlines. After all, it's pretty attractive to consider investing in stocks that are up 100%, 200%, or even 5,000% over the last two years, right?

The reality is that bull markets, and bubbles, can run much longer than anyone, even blind permabulls, ever expect. So add exposure, mind your stops, and operate with the understanding that these aren't "buy and forget about them' stocks right now.

Enough about what I think -- let's open up the floor and hear what you have to say.

One question on the recent rare earth spike -- it would seem that these (now quite frothy) stocks owe their run-up purely on Chinese policy. What would happen if the Chinese government simply did a U-turn on this policy and reversed their earlier decision on export ban/restriction of rare earth elements? I'd hate to be long on say Molycorp when that particular piece of news hit the wires! After all -- can we really trust the Chinese government in this regard; in that having effectively manipulated the price of rare earth elements (and the stocks of producers) with this policy, a well-timed reversal would surely reap huge dividends for them -- assuming they wouldn't flinch at steadily dumping prior to the decision announcement. I'd be interested to hear your thoughts regarding the potential for this to occur. -- Dave

Dave brings up a good point and this is certainly a valid concern and a real risk. Chinese policy is anything but easy to predict, and if Beijing suddenly says it is reversing the export ban I would expect these stocks to sell off. However, I think there is a valid concern that over the long haul the world doesn't want to be dependent on China for these elements. The expansion programs of mining outfits in the U.S., Canada, Australia, etc. support this.

Stan asks: Are you compensated in any way from the companies you recommend?

No, not in any way. All of our research is independent. If members of our staff own shares of companies that we write about you will see this in a disclosure either in or at the bottom of the article.

Thompson Creek (TC) mines molybdenum in Idaho, and processes it in Pa. now, this year -- currently. I just wonder why it garners so little attention -- Mike

Good call Mike. Thompson Creek mines molybdenum, gold, and copper and is actually a profitable company. The stock currently trades with a forward price-to-earnings ratio of 10.8 and analysts expect sales and earnings growth to come in at 40% and 20% in 2011.

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