Dana Lyons Commentary – Fri 30 Mar, 2018

It’s Time To Be Defensive With Your Portfolio

Fund Manager Dana Lyons joins me today to share his thoughts on the US equity markets. The markets inability to climb back to all time highs has Dana thinking the top might be in already this year.

Click download link to listen on this device: Download Show

Here are a couple websites of Dana’s that you can check out.


Featuring:
Dana LyonsCory Fleck
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Comments:
  1. On March 30, 2018 at 11:20 am,
    Excelsior says:

    About That Gold/Silver Ratio…

    by @Goldfinger on March 30, 2018

    “The current depressed price of silver and mining shares is a bit different from the last 3 blue circles in the above chart; mid-2003 was the end of a brutal bear market in precious metals, Q4 2008 was the most vicious and violent bear market that most people who are alive today have ever experienced, and finally Q1 2016 was the end of a grueling five year bear market and also the initial lift-off in what is presumed to be a new bull market. ”

    “The current precious metals market environment is definitely not a confirmed bear market, but it has the makings of a ‘stealth’ bear market as evidenced by the gold/silver ratio reaching 82 (a level only previously reached in the depths of bear markets). I see two primary scenarios from here:”

    1. “We are on the verge of a tremendous buying opportunity in precious metals and mining shares and a rebound similar to February-May 2016 is imminent. ”

    2. “The ‘stealth’ bear market is about to become a real bear market (which will be confirmed if the December 2016 low at 160 on the HUI is breached). ”

    “From my vantage point the odds favor scenario #1 and my portfolio is positioned as such, however, scenario #2 is definitely a real possibility and a painful one at that. For those interested in trading the gold/silver ratio itself, I don’t envision a scenario in which the ratio exceeds 90 and a mean reversion to the mid-60s is certainly within the realm of possibility over the next 12 months – this makes a long silver/short gold pairs trade fairly attractive from current levels.”

    https://ceo.ca/@goldfinger/about-that-goldsilver-ratio

    • On March 30, 2018 at 4:34 pm,
      Dick Tracy says:

      Ex, what would you suggest investors do who only have say $5000 US or equivalent and they wanted to buy into the precious metals market. There are a lot of small fry swimming around that don’t have the capital that you do. DT

      • On March 30, 2018 at 7:26 pm,
        Dick Tracy says:

        I think the best investment anyone starting out with a small portfolio at this time is to buy physical silver. Right IT! DT

      • On March 30, 2018 at 9:04 pm,
        Excelsior says:

        DT – Good question, but to be clear, I’m not an investment advisor, and what I post about here is more the speculative side of the mining stocks. However, I’ll take a little time and address the question.

        I do agree with you that a good place for investors to start is holding some physical metals, but I don’t really consider holding Gold or Silver in a vault, or in jewelry/coins/bars, or even in paper form through ETFs an “investment.” I consider that insurance, a diversifier, and a store of value and it isn’t necessarily supposed to provide big upside…. rather it is supposed to protect downside in other asset classes during chaos.

        ** For example when most asset classes got rocked to the downside in Jan/Feb of this year and the general stock markets, bonds, currencies, and cryptos, etc.. were taking a nosedive, Gold & Silver held pretty steady. That is the idea with holding the Precious Metals, but they are more of an uncorrelated asset class, and a wealth preserver (the insurance in someones portfolio).

        ________________________________________________________________

        If an investor is just starting out with $5,000 dollars, then there still is no one-size-fits-all answer. It comes down to what their goal is for returns, and how much risk they are willing to take on, and how quickly they want to measure if their investment was a success/failure.

        So, if an investor wants to just make 5-10% returns over a longer time period, then I’d likely suggest a dividend paying stock or in the resource sector a streaming company like Franco Nevada or Royal Gold or Wheaton Precious Metals, etc…

        If they wanted to get a bit more aggressive and take more risk through year end, then I’d suggest an ETF like GDXJ or SILJ, with the warning the mining stocks are more volatile and they could be down 20-50% at one point, but then back up that much towards the end of the year. It would be important that they’d be able to stomach that kind of volatility and not freak out if their account is in the red by 30% for part of the year (especially if other sectors are going nuts like we saw last year with the pot stocks and cryptos and even general stock indexes).

        If they wanted to take on even more risk with their seed capital of $5,000 then I’d recommend at least diversifying it into 5 companies at $1000 a piece, and if they wanted to invest in mining companies I’d suggest getting 1 solid Mid-Tier producer, 1 more leveraged Jr Producer, 1 Development stage company (Developer) w/ good economics, 2-3 payback, IRR 20%+, and 2 Exploration programs w/ good team, money in the bank for solid drilling program in 2018, and in a safer jurisdiction. This is the riskiest approach, because if the investor doesn’t understand what they are investing in, isn’t going to spend the time to do their homework and DD, and is just throwing darts, then it would be much safer to just buy an ETF diversified across 30-40 names instead. There is more upside with picking one’s own basket of stocks, but also much more risk.

        If they were balls to the walls crazy and didn’t mind taking on even more risk, and really wanted to learn the basics of Technical Analysis, and spend 2-3 months paper trading without real money first, then it would make sense to discuss swing-trading positions, but most investors don’t have the knowledge & discipline, the systematic approach that they’ll stick with in good times and bad, nor the stomach for active trading. Most shouldn’t be doing it, but of course it yields the very highest returns, but also most good traders will be wrong 30-40% of the time and could have large losses. The only way trading works is to have successes that take care of the inevitable bad trades, and a good process for limiting downside losses (limit orders, stop loss trades, or be glued to a screen).

        Again, there are many types of investors from longer term value “buy and hold” investors, to day traders watching the 1 minute charts and everything in between. Most investors aren’t comfortable with nearly as much risk as they may think they are and would be better off plopping some money in streamers or royalty companies or a good ETF and just letting it move it’s way through the metals cycle.

        ____________________________________________________________________

        For investing and speculation, I particularly like swing trading the mining stocks because they are so volatile and can move 5%-20% in a given day and 2-3 times that on an eventful week. However, I have money on the line that is OK for me to lose, I am diversified across a number of commodity and energy sectors, and sub-sectors (producers/developers/explorers/royalty cos).. I’ve spent years learning the basics of Technical Analysis, and have executed a large number of trades, and don’t mind insane amounts of volatility (in fact I prefer it). That is why I don’t whine if a company drops 20% 30% 40% and don’t celebrate for too long if a company goes up 40% 100% or 400%. The big wins that become multi-baggers will bail out a number of bad trades, but even then the question comes down to how long to hold before pulling profits. This comes down to technicals, but also how much profit one wants to lock in so that they can sleep at night and to manage risk accordingly.

        ________________________________________________________________

        For example, this week on Monday, I was involved in all 3 M&A deals (Hecla/Klondex, Alio/Rye Patch, and Anaconda/Maritime). For me the big mover was Klondex that surged up 59% on Monday, but I only had 1 tranche of a position in place, and really wanted to have a 2nd & 3rd in place before the takeover happened. In addition, I was hoping it would happen at a higher level with the metals really got moving and the shareprice had moved up a lot more.

        So when I considered I’d only been holding that position for a little over a week, and I personally had over a 56% return, then I cut bait and booked the profit. If I had a larger position and had gotten the 2nd and 3rd tranches in place, then I would only have trimmed some of the profits, and would have left the rest of the position in place to merge with HL and then got the shares in the new spin co as a kicker, but I had other distressed companies I wanted to deploy funds into and didn’t want to hang around for all that to play out when metals could also pull back in the interim.

        So there is no shame in booking a 56% profit in a bit more than a week as that’s far more than most people’s investments will move in 2-4 years on main street, but secretly I was bummed because I was interested in building a multi-bagger return in KLDX. Still that was a nice pick up swing trade for the week.

        Then on Tuesday Balmoral dropped by 37% mid-day on the temper tantrum the market threw when they had over-estimated what the maiden resource estimate would be, so I bought an initial speculative position when it was around 35% down, because the market often over-reacts, but that is still a very risky bet to take. The stock could keep sliding, rebound back on a metals rally, be dead money for a while, or could gradually creep up over time. My strategy here is to take some off the table is there is a nice rally and then leave some in place for the longer term rerating (that may take 2-3 quarters to play out). I wouldn’t advise a new investor with limited funds to make a trade like that, but it is only about 1% of my portfolio so it is just a speculative punt for me personally.

        With Exploration stocks, it is best to have a basket of them, but knowing up front that only 1 in 3000 exploration targets & deposits actually gets developed into a mine so the odds are terrible. However, good soil samples, rock chips, VTEM surveys, killer drill results, a permit victory, etc.. can spike an explorer 10% 30% or even 50% in a day or two and that can really get the wheels turning. If more investors pile in the stock can go up 100-300% in a relatively short amount of time, but the key is to then take the win, as many other exploration stocks will go bust.

        I’m actually conservative with a chunk of my speculative funds by betting on Producers & Royalty companies, and then take a portion and put it in Developers that have major catalyst coming up in the quarter or at least within the year. I sprinkle in a few explorers in each commodity for the upside potential, but make most of my returns off producers that get rerated, or developers that achieve their milestones and get rerated. People that bet only on Explorers are willing to take on much more risk than I, but to each their own.

        • On March 31, 2018 at 8:07 am,
          Dick Tracy says:

          WOW, your reply is something anyone could benefit from, it really shows your depth of understanding in the markets. I don’t know whether Cory has interviewed you, I think you do your own interviews as well, but you guys should get together for an on air discussion. DT

          • On March 31, 2018 at 8:28 am,
            Excelsior says:

            Thanks for the kind words DT. It was a good thought exercise to consider your question.

            BTW – No interviews for me, as I’m just some dude and not an expert in anything. 🙂

          • On March 31, 2018 at 9:03 am,
            OOTB Jerry says:

            Ditto……..on………your reply is something anyone could benefit from, it really shows your depth of understanding in the markets

          • On March 31, 2018 at 2:23 pm,
            bonzo barzini says:

            DT, silver is great. You might also buy an AR-15, a Ruger 22 rifle, a shotgun, and lots of ammo.

          • On April 2, 2018 at 10:17 am,
            b says:

            Too late for this comment most likely.
            DT, if your in Canada, use your tfsa account and you pay no tax on profits.

    • On March 30, 2018 at 10:10 pm,
      Excelsior says:

      It’s Not Yet Time for Gold

      by @TheDailyGold (Jordan Roy-Bryne) on March 31, 2018

      “Assuming stocks rebound and long-term bond yields continue to moderate, then Gold is unlikely to breakout this spring. However, that is perfectly okay as our historical study suggests the miners (while facing little downside) may not begin a real bull move for several months. Gold Investors should not be discouraged as they could panic at the absolute worst time (I’m already seeing it anecdotally). Regardless of whether the bull move begins in a few months, five months or whenever, we continue to remain patient while accumulating the juniors we think have 500% return potential over the next 18-24 months.”

      https://ceo.ca/@thedailygold/its-not-yet-time-for-gold

  2. On March 30, 2018 at 9:58 pm,
    Excelsior says:
  3. On March 30, 2018 at 10:36 pm,
    Excelsior says:

    A contributor over at ceo.ca by the handle @Edp007 posted this today and it seemed worth reposting.

    ___________________________________

    @Edp007 – You will know of Steve Jobs, CEO and maker of iPad…iPhone etc.

    He died a billionaire at 56yrs of Pancreatic Cancer and here are his last words on the sick bed:

    >> Steve Jobs’ last words

    “I reached the pinnacle of success in the business world. In others’ eyes my life is an epitome of success.

    However, aside from work, I have little joy. In the end, wealth is only a fact of life that I am accustomed to.

    At this moment, lying on the sick bed and recalling my whole life, I realize that all the recognition and

    wealth that I took so much pride in, have paled and become meaningless in the face of impending death.

    You can employ someone to drive the car for you, make money for you but you cannot have someone to bear the sickness for you.

    Material things lost can be found. But there is one thing that can never be found when it is lost – “Life”.

    When a person goes into the operating room, he will realize that there is one book that he has yet to finish reading – “Book of Healthy Life”.

    Whichever stage in life we are at right now, with time, we will face the day when the curtain comes down.

    Treasure Love for your family, love for your spouse, love for your friends…

    Treat yourself well. Cherish others.

    As we grow older, and hence wiser, we slowly realize that wearing a $300 or $30 watch – they both tell the same time…

    Whether we carry a $300 or $30 wallet/handbag – the amount of money inside is the same;

    Whether we drive a $150,000 car or a $30,000 car, the road and distance is the same, and we get to the same destination.

    Whether we drink a bottle of $300 or $10 wine – the hangover is the same;

    Whether the house we live in is 300 or 3000 sq ft – loneliness is the same.

    You will realize, your true inner happiness does not come from the material things of this world.

    Whether you fly first or economy class, if the plane goes down – you go down with it…

    Therefore.. I hope you realize, when you have mates, buddies and old friends, brothers and sisters, who you chat with, laugh with, talk with, have sing songs with, talk about north-south-east-west or heaven and earth, …. That is true happiness!!

    Five Undeniable Facts of Life :
    1. Don’t educate your children to be rich. Educate them to be Happy. So when they grow up they will know the value of things not the price.

    2. Best awarded words in London … “Eat your food as your medicines. Otherwise you have to eat medicines as your food.”

    3. The One who loves you will never leave you for another because even if there are 100 reasons to give up he or she will find one reason to hold on.

    4. There is a big difference between a human being and being human.
    Only a few really understand it.

    5. You are loved when you are born. You will be loved when you die. In between, You have to manage!

    NOTE: If you just want to Walk Fast, Walk Alone! But if you want to Walk Far, Walk Together!

    Six Best Doctors in the World
    1. Sunlight
    2. Rest
    3. Exercise
    4. Diet
    5. Self Confidence and
    6. Friends

    Maintain them in all stages of Life and enjoy a healthy life.

    Sent with Smiles, Affection and Love !!” — Steve Jobs

    • On March 31, 2018 at 2:28 pm,
      bonzo barzini says:

      Thanks for posting, Ex.

  4. On March 31, 2018 at 8:00 am,
    Silverdollar says:

    Ex. Thank you. What a pattern to live by, no? Here’s another quote from Jobs.

    “Almost everything — all external expectations, all pride, all fear of embarrassment or failure — these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.” Steve Job

    • On March 31, 2018 at 8:25 am,
      Excelsior says:

      Another good Jobs quote Silverdollar.

      It helps to keep things in perspective.

      Ever Upward!

  5. On April 1, 2018 at 9:25 pm,
    Marksman says:

    Touching 100 crore depends where it starts its 2nd week from if it starts with 4cr friday then its a sure shot 100 but if it starts anything less than 3 then 100 crore is far for it.. it will finish 85-90 But looking at the collection trend it seems its going to start friday at 3.5 If this happens then collections are below Fri 3.5cr sat 4.5cr sun 6cr mon 2.75cr Tues 2.5cr wed 2.25cr thur 2 Week 2 total = 63 + 23.5 = 86cr Week 3 (baaghi release) = fri 1.25 + sat 1.5cr sun 2cr mon 0.8cr tue- 0.7cr wed- 0.6cr thu- 0.5 Week 3 total = 86 + 7.3cr + 2cr remaining weeks Total life time 95cr So basically it surely needs above 4 cr to stand a chance for 100cr and i hope it does coz its a gud movie


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