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'Buy the Dip, Sell the Rip'.. The Investor's Thread (Read 113297 times)

petejh

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Bit of an update, 4 weeks on. The tin and copper markets are hitting ATHs. 2021 definitely the year to be in the 'transition' metals. Much I could waffle about, it all boils down to DYOR but as you'll see below for those with time to do the research and means to take advantage there are gems out there in this current commodities market, with potential for life-changing gains.

Bit of an update, I'll focus on companies in which I've recently invested.

Greatland Gold (in @1.5 & recently @18.5) Currently 20.40  +10.2%
Broke out from it's recent downtrend over the last couple of days, technically looking strong for high 20s/low 30s. I'll be selling some if it hits the high 20s, likely to drop back here from sellers who bought into the last hype-fuelled rise at the high 20s/low 30s, bailing out to break even following the drop. Keeping a core holding for the long term as the deposit is a no-brainer. Short term trade & 2-5 year hold
Now expecting this to move sideways until starting to rise later in the year towards release of the PFS. Outside chance of a home-run discovery at one of their projects in P.R.E. or Scally, otherwise just a solid long-term hold.

Alphamin (in @ 0.57) Currently 0.76  +33%
Released quarterly earnings last week, excellent results and the year ahead looking even better on the back of tin shortage and exploration upside at Mpana south. Very positive, debt free by summer and even talk of a dividend. 2-5 years hold.
Hallgarten broker upgraded their 12-month price target to 0.80 on April 6th. https://alphaminresources.com/wp-content/uploads/2021/04/Alphamin_April21_Update_2.pdf
Good overview on the investment case here on value investor: https://www.valueinvestorsclub.com/idea/ALPHAMIN_RESOURCES_CORP/4744168116
Quarterly earnings were good, but the next 3-4 quarters are going to be incredible! To top it they just released the much antipicated exploration results from their Mpana South project.. basically a mirror image of what they have in production at Mpana North. Barring guerrilla attack or government takeover (had to get that caveat in) this will be $1+ very soon or I'll bum doylo.
 
Filo Mining (in @ 2.98 & 3.50) Added more @ 8.79  Currently 9.39  +215%
Got in the day before drill results were reported. Excellent results! Many more assays to report over the coming 6 months. Very happy about the growth prospects of the Filo de la Sol prospect. 6-12 months hold.
https://www.newswire.ca/news-releases/filo-mining-reports-942m-at-0-67-cueq-extends-the-deposit-1-000m-to-the-north-801298452.html
I have loads of research I could share on Filo if anyone's interested. Long story short, last week's results blew up expectations, and indicate this will be the biggest copper-gold discovery in the last 20 years. By the end of this year it'll be at $20+ and a takeover could easily be in region of $40. This sort of investment doesn't come around very often in an investor's lifetime - I did it once with GGP, and I may have done it again with Filo. Thanks to one very smart person passionate about sharing truth.

Meridian Mining ( in @ 0.45) Added more @ 0.65 Currently 0.78  +73%
Got in on the back of xrf results  of drill core showing very high grades at their Cabacal project (unusual approach to report xrf grades and a bit frowned upon). Awaiting assays back from the lab to confirm - should be late April/early May, but looking good here to grow into a large VMS project. Pretty excited about this project, which is one of a few win the last couple of years following the narrative of 'old mine that was uneconomic and forgotten about, being re-explored based on today's and future prices of copper/gold'. Good outline here: https://twitter.com/MeridianMining/status/1382773725876080641?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet
6-12 months hold.
Another amazing solid investment. Plenty going on here. Again I can supply a lot of research on this one.

Centaurus Metals (in @ 0.78) Currently 69.5  -11%
Released a very positive scoping study for their Jaguar nickel deposit recently which the market sold into, price slowly floating back up. 2-5 years hold.
No worries here, long term hold.

KEFI mining (in @ 0.230)  Currently 0.196  -11%
Took a punt on this one the day after it broke long term resistance on expectations of a positive decision on funding for it's project in Ethiopa. Announcement yesterday that funding decision delayed until June. Holding pattern, sell on news.
Same, waiting for finance announcement end of May/early June.
 
Cornish Metals (in @ 0.10)  Currently 0.15  +50%
Drilling commenced in early April at their United Downs project to confirm historic high grade tin. Results expected May/June. Company received permit to dewater South Crofty, plus other related permits for surface infrastructure. Very much dependant on United Downs confirming the historic high grade tin grades. Could do very well on the momentum behind tin. Hold until assays then decide.
Assays not far off now, if they replicate the good widths of high grade tin of last results then this will rocket (even more..), if the results don't replicate then...  The dewatering of South Crofty has commenced, will take 8-24 months. Price of tin will have made it a precious metal by then at the current rate of increase.

Trackwise (in @ 2.60)  Currently 2.41  -7%
Won £38m contract last year to supply their printed witing harness technology to Arrival - the EV bus and van manufacturer who are setting up a manufacturing facility in the UK (and elsewhere globally) this year. Raised £11 million last November to quadruple production of its IHT wiring harness by Q4 this year. Various rumours circulating of an aerospace and/or medical contract, plus increase in size of the EV contract. 2-5 year hold
No worries here, long term hold.

Ilika (in @ 2.15)  Currently 2.15  +0%
Announced they'd won a £250,000 grant from the advanced propulsion centre, to collaborate with Comau to tool up a large-scale manufacturing line, using the UK's Battery Industrialising Centre facility to produce their Goliath solid state battery at scale.
Good little Q&A here regarding the plan: https://www.directorstalkinterviews.com/ilika-qa-continuing-to-improve-goliath-technology-and-scaling-up-with-the-apc-grant-lonika/412976816
Berenberg appointed as broker last week, issued their price target of £3.20 (paywalled)
Various positive news around battery production and EVs, very hot sector at the moment. This FT article for e.g.  https://www.ft.com/content/c4e075b8-7289-4756-9bfe-60bf50f0cf66
2-5 year hold.
No worries here, long term hold.


Copper the new oil..
« Last Edit: May 17, 2021, 10:38:13 pm by petejh »

kelvin

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Bit of an update, 4 weeks on. The tin and copper markets are hitting ATHs. 2021 definitely the year to be in the 'transition' metals. Much I could waffle about, it all boils down to DYOR but as you'll see below for those with time to do the research and means to take advantage there are gems out there in this current commodities market, with potential for life-changing gains.

Bit of an update, I'll focus on companies in which I've recently invested.

Greatland Gold (in @1.5 & recently @18.5) Currently 20.40  +10.2%
Broke out from it's recent downtrend over the last couple of days, technically looking strong for high 20s/low 30s. I'll be selling some if it hits the high 20s, likely to drop back here from sellers who bought into the last hype-fuelled rise at the high 20s/low 30s, bailing out to break even following the drop. Keeping a core holding for the long term as the deposit is a no-brainer. Short term trade & 2-5 year hold
Now expecting this to move sideways until starting to rise later in the year towards release of the PFS. Outside chance of a home-run discovery at one of their projects in P.R.E. or Scally, otherwise just a solid long-term hold.

Alphamin (in @ 0.57) Currently 0.76  +33%
Released quarterly earnings last week, excellent results and the year ahead looking even better on the back of tin shortage and exploration upside at Mpana south. Very positive, debt free by summer and even talk of a dividend. 2-5 years hold.
Hallgarten broker upgraded their 12-month price target to 0.80 on April 6th. https://alphaminresources.com/wp-content/uploads/2021/04/Alphamin_April21_Update_2.pdf
Good overview on the investment case here on value investor: https://www.valueinvestorsclub.com/idea/ALPHAMIN_RESOURCES_CORP/4744168116
Quarterly earnings were good, but the next 3-4 quarters are going to be incredible! To top it they just released the much antipicated exploration results from their Mpana South project.. basically a mirror image of what they have in production at Mpana North. Barring guerrilla attack or government takeover (had to get that caveat in) this will be $1+ very soon or I'll bum doylo.
 
Filo Mining (in @ 2.98 & 3.50) Added more @ 8.79  Currently 9.39  +215%
Got in the day before drill results were reported. Excellent results! Many more assays to report over the coming 6 months. Very happy about the growth prospects of the Filo de la Sol prospect. 6-12 months hold.
https://www.newswire.ca/news-releases/filo-mining-reports-942m-at-0-67-cueq-extends-the-deposit-1-000m-to-the-north-801298452.html
I have loads of research I could share on Filo if anyone's interested. Long story short, last week's results blew up expectations, and indicate this will be the biggest copper-gold discovery in the last 20 years. By the end of this year it'll be at $20+ and a takeover could easily be in region of $40. This sort of investment doesn't come around very often in an investor's lifetime - I did it once with GGP, and I may have done it again with Filo. Thanks to one very smart person passionate about sharing truth.

Meridian Mining ( in @ 0.45) Added more @ 0.65 Currently 0.78  +73%
Got in on the back of xrf results  of drill core showing very high grades at their Cabacal project (unusual approach to report xrf grades and a bit frowned upon). Awaiting assays back from the lab to confirm - should be late April/early May, but looking good here to grow into a large VMS project. Pretty excited about this project, which is one of a few win the last couple of years following the narrative of 'old mine that was uneconomic and forgotten about, being re-explored based on today's and future prices of copper/gold'. Good outline here: https://twitter.com/MeridianMining/status/1382773725876080641?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet
6-12 months hold.
Another amazing solid investment. Plenty going on here. Again I can supply a lot of research on this one.

Centaurus Metals (in @ 0.78) Currently 69.5  -11%
Released a very positive scoping study for their Jaguar nickel deposit recently which the market sold into, price slowly floating back up. 2-5 years hold.
No worries here, long term hold.

KEFI mining (in @ 0.230)  Currently 0.196  -11%
Took a punt on this one the day after it broke long term resistance on expectations of a positive decision on funding for it's project in Ethiopa. Announcement yesterday that funding decision delayed until June. Holding pattern, sell on news.
Same, waiting for finance announcement end of May/early June.
 
Cornish Metals (in @ 0.10)  Currently 0.15  +50%
Drilling commenced in early April at their United Downs project to confirm historic high grade tin. Results expected May/June. Company received permit to dewater South Crofty, plus other related permits for surface infrastructure. Very much dependant on United Downs confirming the historic high grade tin grades. Could do very well on the momentum behind tin. Hold until assays then decide.
Assays not far off now, if they replicate the good widths of high grade tin of last results then this will rocket (even more..), if the results don't replicate then...  The dewatering of South Crofty has commenced, will take 8-24 months. Price of tin will have made it a precious metal by then at the current rate of increase.

Trackwise (in @ 2.60)  Currently 2.41  -7%
Won £38m contract last year to supply their printed witing harness technology to Arrival - the EV bus and van manufacturer who are setting up a manufacturing facility in the UK (and elsewhere globally) this year. Raised £11 million last November to quadruple production of its IHT wiring harness by Q4 this year. Various rumours circulating of an aerospace and/or medical contract, plus increase in size of the EV contract. 2-5 year hold
No worries here, long term hold.

Ilika (in @ 2.15)  Currently 2.15  +0%
Announced they'd won a £250,000 grant from the advanced propulsion centre, to collaborate with Comau to tool up a large-scale manufacturing line, using the UK's Battery Industrialising Centre facility to produce their Goliath solid state battery at scale.
Good little Q&A here regarding the plan: https://www.directorstalkinterviews.com/ilika-qa-continuing-to-improve-goliath-technology-and-scaling-up-with-the-apc-grant-lonika/412976816
Berenberg appointed as broker last week, issued their price target of £3.20 (paywalled)
Various positive news around battery production and EVs, very hot sector at the moment. This FT article for e.g.  https://www.ft.com/content/c4e075b8-7289-4756-9bfe-60bf50f0cf66
2-5 year hold.
No worries here, long term hold.


Copper the new oil..

Cheers for the update (I've been silently following) and it's nice to see some good movement in their/your results.

I have a bit of cash coming free in a month's time and have nothing in this year's ISA allowance. So I might take a bite at FFilo
*although my Mrs makes copper jewellery and just watching the cost of that go up this year has been wallet breaking

sdm

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I don't think Filo is eligible to be held in ISAs?

kelvin

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I don't think Filo is eligible to be held in ISAs?

That's me not explaining fully and no sleep last night - I mean, use the ISA and the rest in Filo.

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I don't think Filo is eligible to be held in ISAs?

How so?

https://www.hl.co.uk/shares/shares-search-results/f/filo-mining-corp-common-stock-npv

Yeah I thought you could, although potentially there's some sort of Canadian tax paperwork faff to sort out (I don't know, but you have to do something for US shares don't you to address the tax stuff?).

Fultonius

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 You need to do a form that takes 2 mins.

sdm

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Thanks for the correction.

petejh

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I don't think Filo is eligible to be held in ISAs?

That's me not explaining fully and no sleep last night - I mean, use the ISA and the rest in Filo.

Filo available in isa depending on your broker. I use II and they allow all sorts of minor international markets in my isa account.


4 brokers raised their price targets for filo since last Thursday’s drill results. Interim price targets:
BMO $11 from $4.50
Cannacord Genuity $13 from $5
National Bank of Canada $12.75 from $6
Haywood revised theirs last Friday,  to $11.50 from $5


3 risks to be aware of with Filo:
1. There will likely be a capital raise in the coming months to fund the increased year-round drilling required to prove up such a massive discovery. This will be minorly dilutive - $50m would currently represent around 5% of market cap. Filo are in the driving seat and can pick their moment.
2. There are two zones of copper mineralisation - oxide cap (lower grade, shallow open pit) and sulphide zone (high grade, underground bulk mining). The sulphides contain an arsenic component. Arsenic is deleterious to value from the smelter. How deleterious depends on the ratio between grade of copper versus ppm of arsenic. High grade copper negates much of the deleterious impact of arsenic. Low grade copper plus high amounts of arsenic = problem. Filo don’t have that problem according to the latest investor webinar on Monday, but they’re carrying metallurgy on the ore and will report on findings.
3. The deposit straddles the Argentina/Chile border. Thankfully 90/10 Argentina-Chile. Chilean politicians are trying to pass a massive tax hike on mining supposedly to help pay for covid hit, which would result in a 75% tax rate when copper is over $4 per pound (current spot price $4.55). This is a massive disincentive for miners to open new projects in chile and is expected to result in exodus of investment and raising copper prices even further. Filo don’t need to mine the Chilean part of the ore, the best grades and the meat of it are on the Argentina side. Risk is of other s.american countries following Chile. Peru’s leading presidential candidate is talking about a similar policy. Brazil and Argentina aren’t, but could. Ultimately would send the copper market into a frenzy if those policies come about and would work against them as the big miners will just shut down their investment into those countries and limit operations until things change. There’s no point mining with an added 40% overhead, the minerals aren’t going anywhere and prices will go ballistic if they don’t mine. 
Info: https://www.bloomberg.com/news/articles/2021-05-06/in-top-copper-nation-chile-a-giant-tax-hike-moves-a-step-closer


The upside is genuinely massive. The next two holes are pending reporting to market and some think they’ll be very meaty (bearing in mind the last hole reported was the best copper intercept in decades). Hole 46 goes beyond 1500m and Hole 52 a vertical step out hole to the north to confirm a zone where they’ve already had good grades.
« Last Edit: May 19, 2021, 04:32:56 pm by petejh »

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I have an awful lot of old copper piping in the shed. Is this a good time to sort it out and weigh it in. Or should I hang on to it a little longer?

petejh

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Is your shed in Chile? If yes then sell now before higher taxes!
Consensus view is for copper price to continue to increase. Up to a point where it becomes unaffordable and substitutions take over for some electrical uses, aluminium for eg.

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Pete, any thoughts on Aluminium Ion batteries?

Looked at this some more. An Australian company called Graphene Manufacturing Group listed on the Toronto exchange  released news last week about their graphene aluminium-ion battery cells.. If they can scale this up it'd be very interesting. I've taken a small position, missed the recent big rise.

Overview: https://www.forbes.com/sites/michaeltaylor/2021/05/13/ev-range-breakthrough-as-new-aluminum-ion-battery-charges-60-times-faster-than-lithium-ion/?sh=1b401886d287

Interview and next steps to market: http://www.kereport.com/2021/05/14/gmg-graphene-manufacturing-group-recent-graphene-aluminum-ion-battery-performance-data-and-the-next-steps-to-get-the-batteries-into-the-market/

Video released today on 'cleanerwatt':

Links to more detailed information can be found on the CEO.ca  GMG board.. if you wade through the 'face-ripping' posts there are some links to good info.
« Last Edit: May 26, 2021, 05:56:37 pm by petejh »

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Crypto in a slump, but could be good buying opportunity. Good waiting to rebound opportunity for me  :whistle: 

For all those who question the utility and energy use of Bitcoin - I suspect something like Celo (disclosure, I'm holding a small amount) ticks so many boxes:

https://medium.com/celoorg/a-carbon-negative-blockchain-its-here-and-it-s-celo-60228de36490

It's also price stable for use as a payment scheme. Currently pegged to the USD of EUR, but they're aiming to peg against natural resources (rainforest etc.). Techno hippies. Happy for any inside info on why it's a bad idea...

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Pete, any thoughts on Aluminium Ion batteries?

I've taken a small position, missed the recent big rise.


Where did you do your trade? Can't see it on HL or II.  Sounds promising!


P.S. Ever thought of running your own UKB hedge fund???   8)
« Last Edit: May 31, 2021, 05:43:57 pm by Fultonius »

petejh

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Apols missed that post.. I use Interactive Investor for all my trades (ISA and standard trading account). Can buy pretty much any company in any western market, in the trading account or the ISA.


So, it's all going off in resource investment land..

Filo. Research paid off and you won't see many better resource discoveries in a lifetime. I'll forever chuckle at Offwidth's view whenever I think of Filo (although I could chuckle about him when I think about many other companies I also hold). Holding to $20 where I'll take some profits and keep some in for a buy-out. I'd urge anyone interested to look into Filo even at current price, they're still massively undervalued. Already turned what was a large holding into a very large holding but expecting it to double from here.
Latest company presentation out here: https://filo-mining.com/site/assets/files/6370/fil_corp_pres_june_2021-09.pdf


Cornish Metals. Price going off on one now.. There's been a lot of publicity surrounding the G7 in Cornwall, and there's various talk and rumours of government announcements over the weekend about funding for developing Cornwall's mining industry. Lots of political capital to be had here, with banner headlines of protecting UK's strategic assets needed for the electrification pivot and domestic manufacture of EVs/batteries and infrastructure. Basically this is a no-brainer 'right time/right place' opportunity for the miners and supporting actors to make their case.
The South Crofty resource estimate was surprisingly updated yesterday with a large increase in inferred resource. Taking advantage of the media spotlight no doubt. But the big news is still awaited - the make or break drilling results from the United Downs project. Expected by this weekend or just after.. This will either rocket the share price (to unrealistic levels - sell the spike!), or if they disappoint the price will take a big hit. A binary speculative play. I took out profits on Monday with an approx 40% gain, and I'm keeping the rest in for the win.. 
Super film explaining the future of Cornwall's mining industry and it's link to the future green infrastructure here (Cornish Metals @ 52mins)

Alphamin. Up at 73-75 level currently. They released more drilling results from their Mpana South project.. as expected amazing resource which can double their asset/output. Really isn't a more no-brainer company in mining, provided you can stomach the jurisdiction risk of DRC. Tin shortage isn't going away. This is a cash-generation machine and will be debt-free and paying a dividend by autumn. I have a massive holding in this and holding for $1.50

Greatland. Broker canncord genuity initiated coverage with 25p price target. Lots more to come but a slow burner for now. Updated drill results out last night continue to deliver high grades. 18-24 months until producer re-rating. PFS later this year will be a catalyst.

 
« Last Edit: June 10, 2021, 05:27:58 pm by petejh »

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Filo. Research paid off and you won't see many better resource discoveries in a lifetime.

Thanks Pete, I bought some when you first suggested it.

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Filo. Research paid off and you won't see many better resource discoveries in a lifetime.

Thanks Pete, I bought some when you first suggested it.

Nice one, I'm on the bandwagon too. Just got a little more too. As a relatively inexperienced investor with a poor track record in crypto......  It's a tricky balance finding the optimum level of risk/reward (in terms of how much $$ it's worth going in on something like this). Not just following Pete's word, I did do a fair bit of research (how effective my research is could be questioned...).

I guess it's probably good to consider it in terms of how long it would take to accumulate the stake through work?  For me, I've only got about 50% of my usual spare monthly cash in FILO, plus similar or less in a few others that may, or may not yield good results. So, all in I have about 2 months' disposable income in "punts" (Arrival - could be a future Tesla, Hyundai - just seem solid with good new EV offerings and an ok yield, and probably my weakest choice - TPIC composites - basically the supplier for most of the wind turbine blades. It's taken a bit of a hit since I bought in (may be overvalued, time will tell).

I guess it's good to start small and see how we go....

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On topic of how much you should risk on each punt, there's quite a good book called Come into my Trading Room by Dr Alexander Elder. A lot of it is about technical and swing trading which is good if you're interested in that.

But one thing that particularly stayed with me is that in the investment banking industry, traders are constrained by risk management professionals who are always looking over their shoulder. And essentially they would never be allowed to put at stake more than 2% of their capital in any one investment.

Dr Elder recommends this as a good rule of thumb for individual traders too, never put more than 2% of your wealth at risk on one investment. This doesn't mean you can't invest more, but you need to set your stop loss so you can't lose more than 2%. Key to long term success is limiting losses.

Always seemed like a good rule to me.

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On topic of how much you should risk on each punt, there's quite a good book called Come into my Trading Room by Dr Alexander Elder. A lot of it is about technical and swing trading which is good if you're interested in that.

But one thing that particularly stayed with me is that in the investment banking industry, traders are constrained by risk management professionals who are always looking over their shoulder. And essentially they would never be allowed to put at stake more than 2% of their capital in any one investment.

Dr Elder recommends this as a good rule of thumb for individual traders too, never put more than 2% of your wealth at risk on one investment. This doesn't mean you can't invest more, but you need to set your stop loss so you can't lose more than 2%. Key to long term success is limiting losses.

Always seemed like a good rule to me.

Interesting, thanks. Was just doing a bit of analysis of the various funds I've recently moved my pensions into, and, due to my ESG/Sustainable bent, and focus on Asia / Emerging Markets - I notice Taiwan Semiconductor Manuf. being the top listing in 3 of them. Just crunched the numbers, and it's only 2.2% of all my holdings, so not too bad.

I take it you'd be counting housing equity, pensions etc. in your "wealth". If so, I'm nowhere near 2% on any single holding. 0.6% on a rough calc on Taiwan SemiConductor.

The £10/trade fee on HL does encourage you to go for bigger holdings so as to minimise your instant loss.

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Filo. Research paid off and you won't see many better resource discoveries in a lifetime.

Thanks Pete, I bought some when you first suggested it.

I also got in on the bandwagon, but at the point of Pete’s update 4 weeks in.

Initially lost a bit in Cornish and Filo but both are up around 15% for me at the moment, that’s including 2 additional buy-ins with Filo.

I’m just waiting on a different account to open so I can get in on Alphamin too.

I spend some time reading through Petes links and tracking the stocks a bit and it felt like a great set of stocks.

I’m not going to make life changing amounts at the moment but a healthy return as things go as hoped.

I previously day traded financial stocks as I tracked them a lot more and knew certain stocks could generally have some steady volatility (e.g. if Lloyds dropped at open it would generally claw back a percent or two over the day). Though it was always small amounts of regular profit.

These are the first stocks I’ve held onto for any amount of time - I said to Pete in a PM that the geology/drilling aspect is really interesting. Finance seemed very speculative but with these there’s real tangible resources which seems to make them a little more predictable.

Also more than evens out my crypto losses  :chair:

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It's good to hear people have benefitted from some of the ideas on this thread. That is the idea of it after all. A few people have messaged similar about Filo and/or Cornish, Alphamin.


Fultonius that post goes to the heart of investing. There's no correct answer as everyone's goals, risk tolerance and life circumstances are different.
A good first step is (I think you said you do this..) to record every trade you make in a trading log - something as simple or elaborate as you like. Mine is just: company, # shares bought, @ what price, total invested, date sold, profit/loss. I make sure with every company I buy to write down a short goal at the time of purchase - i.e. 'sell @x price', 'hold until end of summer drill campaign', 'sell on news', 'expect to go to x price', 'sell if x loss'. Etc.
There's no correct goal (other than to profit, or minimise a loss), just have one so that you can look back and compare to the reality of how things play out. It helps identify if you're being led by emotion/herd thinking.   

This then builds a framework to look at with the benefit of hindsight and better understand your own decision-making in the fear/greed environment of the markets. Once you understand yourself and your relationship to investing better, you can hopefully apply that knowledge to trade in a dispassionate way.

Re risk v return. I find the below useful as a philosophical framework for understanding investment risk. It was written by an investor in a group I'm a member of, a smart guy who I've never met:

''It's which would disappoint you more -- if you stay in and it halved, or you got out and it doubled. Quantify your disappointment level in each case on a scale of 1-10.
But then, make your best guess as to the likelihood of those outcomes, percentage-wise. Adjust those percentages if you are naturally a pessimist or an optimist to reflect your tendency .
And then, multiply the percentages by your disappointment level.

If the results aren't roughly balanced, you may want to rebalance your share holdings.
’’


I do this for large gains, and I record it in my trading log dated so I can look back at my decision-making at that time versus how reality unfolded.

For an e.g. here's the last time I did it for my holding in GGP (fate, I hope you're not paying attention):

Update 30/1/21
12-month outlook

Hold, lose 50% (from 25p to 12.5p)
Disappointment: (out of 10): 7
Estimated likelihood: 20%
140

Sell now, miss out on 100% rise (from 25p to 50p)
Disappointment: 8
Estimated Likelihood: 40%
320

Obviously, the likelihood estimates are personal and subjective based on imperfect information. The better your information the more accurate your estimates can be. People struggle with probability, some more than others. I like thinking in terms of probabilities and find myself doing it often in climbing/general life. Bayes' Theorem fascinates me and the concept resonates. Learning to research and find reliable sources of info increases your chances of making good probability estimates.


Other considerations - what is your goal from investing? Is it a bit of fun and a little spare cash which you don' treally mind if you lose? Or are you trying to build a retirement pot - in which case the first priority should be capital preservation, followed by capital growth. Or are you trying to win big and make a life-changing gain?
The investment goal can merge together and change as circumstances change, they did for me. I started out 20 years ago as just having a bit of fun with spare cash. Then it morphed into trying to build a sum for a mortgage payment. Then I was fortunate to be in the right time/place to know a high-probability jackpot when I encountered it. But only because I'd been present in the markets for the last 20 years taking my chances. Now, I'm firmly in never want to work again mode and balancing capital preservation with a bit of capital growth. At some point I'll go into full-on capital preservation mode with it all in tracker ETFs, bonds, property funds and maybe a little bit of gold. I'll always keep a small pot for trading as I enjoy the research and the game of finding good value and growth companies ahead of the herd. I liken the sense of discovery to developing new routes/crags.

A couple of final considerations -
In mining the exploration companies are often pop and drop due to the nature of making a discovery and then waiting up to 10-15 years to get the finance to build it into a profitable producing mine. Don't hold on too long to most big exploration stories! (GGP is a rare outlier, for reasons too long to go into here).

Producers are leveraged to the price of the commodity. Good quality gold miners are a good 'value' investment play in a rising gold price. The Barricks, Kirkland Lakes, Newmonts and Newcrests of the world. Same for any producer of any commodity - Alphamin the obvious e.g. for tin. Adriatic Metals will be a barnstormer for silver (another company I got in early last year thanks to good research by people gracious with their knowledge).

Running counter to the standard risk/reward narrative is that nearly everyone who makes a life-changing gain does it by disregarding the advice to take profits at a sensible stage. They did it by holding on long-term to a massive riser. There are loads of people I've read tell me how they sold out of GGP for a 100% gain when it went from 1.5p to 3p. They were prudent to do so. Some people including me held and made 2000%. But that's not what normally happens with shares. Steady profit-taking is the way for most long-term success.

On stop-losses. They're a prudent idea but can fail in volatile exploration investment plays. When a company gaps down on opening, say from reporting unexpectedly disappointing results, they'll smash through your stop loss with you unable to sell at the price you set your stop loss. Also market makers go searching for stop-losses and limit sells in volatile companies on AIM. Careful where you set either. For more stable companies/markets they're a sensible protection.

On not putting more than 2% into any share. It's a good way to limit losses, and a good way to limit your gains. A better strategy - 'better' being linked to your goal and risk appetite of course - is to keep buying into your winners (momentum trade) and sell your losers quickly. But like everything it works until it doesn't.
« Last Edit: June 11, 2021, 11:26:03 am by petejh »

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On not putting more than 2% into any share. It's a good way to limit losses, and a good way to limit your gains. A better strategy - 'better' being linked to your goal and risk appetite of course - is to keep buying into your winners (momentum trade) and sell your losers quickly. But like everything it works until it doesn't.

I think it's more about limiting your potential loss on any one trade to 2%, not limiting your input. But as you say stop losses have their flaws, I've been shaken out of the tree a few times. I'm always amazed that this sort of behaviour is legitimate by the market makers, basically institutions taking advantage of information assymmetry to take money from retail investors.

In terms of your trading diary this is exactly what Dr Elder refers to in his book. Same as a training log, helps you learn from your mistakes. I've tried in in the past but for last 5 years my job role has prevented me from trading individual shares. Am now allowed to look at investing again and am considering a PeteJH portfolio. Limited to 2% per position of course.  :P

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  ;D  I'm mostly standing on the shoulders of far smarter investors.

But as you say stop losses have their flaws, I've been shaken out of the tree a few times. I'm always amazed that this sort of behaviour is legitimate by the market makers, basically institutions taking advantage of information assymmetry to take money from retail investors.

I think that's just how large groups of humans work, in lots of areas of life, and the financial system is designed to control the majority and empower the minority. Humans are designed to follow the herd, believe in leaders, listen to authority, and take short-term gratification over long-term reward. And the stock market is a psychological trick played on the unwitting by the more powerful, which uses our biases against us. If you're of a certain anti-authority questioning mindset and understand some of the practices employed by the powerful then I think you can prosper in that environment, provided you work hard and understand it's not a team sport. We're all trading against each other.

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Sorry if this has been posted already. Fascinating video about Bitcoin, from The Economist:



I may have heard something about the energy required to process Bitcoin, but I was unaware that the environmental impact was possibly as significant.

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Filo update, broker Haywood reaffirms target ($20) after the latest drill results released today. Steady hands.. it's a middle-distance event not a sprint. Hole 46 is next catalyst.
https://twitter.com/MiningCatalyst/status/1404895381570215936/photo/1

 

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