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Buy Hold and Prosper does not apply to the Venture Exchange
I am sure there are members who consider me pretty good at picking stock winners with very few losers. Nothing could be further from the truth. I like to be as transparent as possible and always recommend everyone subject their decisions to due diligence before making any investment. Looking at my record for last year 62% of my buys were indeed losers. Of those 46, I dumped and looking back only 2 made a substantial recovery to close the year higher than my selling price and 4, I have either bought lower and sold higher to reduce my losses.. On the other side 26 were winners and I took profits, a few of them more than once and on a key 5 stocks, I made fantastic profits, buying and selling more than once while holding a core position. My biggest loser was Verisante Technologies Inc. VRS. TSX V, which I believe has great potential,good news reports but the timing is not right and other near term opportunities are available.Had I bought and held most of my picks , my asset value would have shrunk instead of having a capital gains problem, a nice problem to have.so if you go for one of my picks stay in contact. I may have taken most of it off the table. BUY SELL AND PROSPER holding a core position on yourbest selections.
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Community Talk
Re: Buy Hold and Prosper does not apply to the Ven ...
Southpen, I can relate. I took a beating on CUU and finally got out around Aug/Sept. There are several examples of these massive low grade deposits... I think for a couple of years investors have been chasing size rather than quality as it seemed the commodities bull would never end. On the surface everything looked OK, but the reality is that even the largest companies are afraid to swallow up these projects that require huge capital commitments (capex). I was hopeful the sovereigns would step in, since they do not have quarterly time horizons and do not have to answer to shareholders. Despite the drubbing, all is not lost as it's experiences like these that help shape profitable investment strategies.
Re: Buy Hold and Prosper does not apply to the Ven ...
Frank, Unfortunately ,the two biggest losers I had last year were also blogs I did on Pinnacle. Luckily ,very little interest was shown. To this day,I admit I saw the flaws in each but I truly believed that the good vastly outweighed the bad. For example the good on, CZQ was it's massive resource ,lots of cash,good share structure ,even a PEA done .The bad was a little more technical.,a multi-mineral deposit of low grade which in a word is EXPENSIVE.. Uranium,Vanadium,Nickel and Moly,all metals I like but not necessarily together, shrined in aluminum shales. I don't know where CZQ is going to end up.I think the technology has to become better to really make deposits like their's economical,whatever the case I took a beating average at about 80 cents and sold at.,22 for tax losses.It finally did me a favor. For what it's worth ,CZQ might be an investment choice of mine again but not for quite a while or until some key factors change.I apologise if anyone followed my lead.
Re: Buy Hold and Prosper does not apply to the Ven ...
Frank,
You are correct – particularly in this market environment, where volatility is in full swing.
When it comes to junior resource investing, I have always gone with the strategy of buying into companies who have planned development milestones expected within 3 to 6 months.
My strategy goes back to the McEwen Life Cycle of a Mine (a question in the Junior Resource Investor iQ Challenge). In that model, it demonstrates the opportune times to get involved in a junior mining play (in very simple terms). Before the ‘discovery phase’ is the most ideal time to buy into a exploration/mining company (from a time and return standpoint); however, it is also the most risky (before a discovery you are really investing in management and nothing more). With that stated, once the discovery is made, more often than not, the stock shoots up many hundreds of percentage points and may never again, in its existence, provide a better opportunity to sell for such profits (from a time and return standpoint). During the ‘building phase’ the mining stock often loses about 50% of what it gained after the ‘discovery’ because its treasury is wiped out and financings are needed during the process of environmental permitting, construction of the mine etc. The statistics show us, very blatantly, that holding during the ‘building phase’ after a discovery, is not wise, as the value of the junior mining stock likely will decrease after the momentum from the discovery fades. Of course, this example is a very simple one and the complexities of trading during those periods can get quite in-depth, but that’s not what we are here to talk about.
Junior resource stocks on the Venture are very risky investments and less than 5% of them ever make it to production. So why buy and hold for years?
Despite the fact that less than 5% of these mining plays ever make it to production, almost every junior resource stock, at some point in its existence, provides investors an opportunity to make a handsome profit on their investment – it always comes down to timing. As an investor, you have to be prepared to buy BEFORE development milestones and most importantly (and often the hardest thing to do) sell when you’ve made a decent profit (after development from the company).
Buying and holding for years increases risk in micro-caps. Many will argue with me, but the statistics speak for themselves. Of course there are exceptions to every rule, but I’m going on my own personal studies of the micro-cap market which I believe to be very accurate. It’s a game of investing in management and then playing the odds.
Happy New Year
Aaron