Erik Wetterling – Why Most Investors Don’t Make Money In Speculative Sectors Like Junior Mining Stocks
Erik Wetterling, Founder and Editor of The Hedgeless Horseman website, joins us for a discussion on how he handles the extreme swings in market sentiment when investing in junior gold and silver mining stocks. He outlines a number of bifurcation with investor belief systems or areas where they think they intellectually know something and take actions in contrast to those in actual practice.
Erik points out a number of reasons that investors fail to make money investing in any speculative sector, not just in the precious metals space. In reality, most investors buy during extreme periods of strength into peaks, and sell during oversold corrective moves into bottoms, due to emotions and sentiment, or doubting or misinterpreting the data and trends unfolding. These same retail investors then place the blame on the companies, or sectors, or other people, instead of their own personal choices on when to buy and when to sell and at what price levels.
Another topic Erik brings up in such a volatile sector involves ways of stacking the odds in ones favor and managing the inherent risks to any company in the mining sector by utilizing diversification and seeking an underlying margin of safety in assets that underpin some inherent value.
Erik goes on to discuss a few different stocks he’s sees interesting risk/reward scenarios in such as Dolly Varden Silver (DV), I-80 Gold Corp (IAU), Goliath Resources (GOT), and Snowline Gold (SGD), all of which are stocks he holds positions in at the time of this recording, and he is sponsored by both Dolly Varden and Goliath Resources.*
*Shad also has a position in both Dolly Varden and I-80 Gold Corp at the time of this recording.
This is not investment advice, and merely us sharing our opinions and what we are doing in our own portfolios. People should seek the advice of an investment professional when making important financial decisions and take full responsibility for their own actions.
*Right now Shad’s portfolio has had a rough year, like many junior resource investors have had, so I could only send you a tax loss at present… Haha! 😉
Good discussion today buddy, and I nodded my head in agreement and chuckled a few times when editing it.
Ever Upward!
Here Erik, a friend of mine passed this article along to me today, and so I want to pay it forward to you amigo.
Play close attention to his initial point being based on how things have done in the miners using the all time high in gold and the massive peak in mining stocks seen in 2011 to measure from as his thesis point. He’s using a extreme high to an extreme low as his rationale, exactly like the people you discussed in the interview that keep using the recent all-time high in Gold in August 2020 as their starting point to measure performance of gold mining stocks to present as their “proof” that you can’t make money in the sector. Classic cherry picking and insanely biased and flawed logic.
There were so many other periods of time that could be measured to show multi-bagger returns, so like all investing, all sectors, and all stocks, it totally depends on what price someone bought, and then when they sold, and if they only did it once or hundreds of times. To assume there was only one potential trade is the height of misdirection and misunderstanding.
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Precious Metals Too Dreadful To Touch Now
By Tim Knight – Jul 07, 2022
https://www.investing.com/analysis/precious-metals-too-dreadful-to-touch-now-200626820
Unfortunately, I have large tax gains again with a 70% paper loss. I need to have losses with paper gains.
Well, you have until the end of the year to get is sorted out for tax purposes Lakedweller2. It sounds like you could just take the paper losses as realized losses to wash out any actual gains that you have, so you’d not owe any taxes on them that way (depending their status as long-term or short-term) Right?
If I sell them now, they will all go up over the next 30 days before I buy them back. If I hold, then they won’t go up until the end of the year. It’s hard to know because what I may buy will go up and I will have more tax profits when I buy the tax losers back at a higher price. I would feel better if they just went up for 12 years like the ones the Fed owns.
I hear ya… it’s hard to know when to pull the trigger on selling or hold for the rebound. Good luck whatever path you decide on.
I figure they can’t help print some more money for the Corporations in the near future as there has been no curbing of derivative debt. I am waiting for something to drop into my Trick-or-Treat bag from the next massive transfer of wealth bail-out.
Well, yeah there is little doubt that the Fed will start handing out magical money from heaven again, and bailing out businesses that are deemed “too big to fail.”
With regards to you getting something in your trick-or-treat bag that may be a longer wait… unless the powers that be go full socialist Universal Basic Income… but that would be a true Halloween horror show…
If the government (which produces nothing) starts handing out supposedly “free” anything, the people are getting tricked and not treated.
Nothing is free, and the cost is pased along to other citizens through direct fiscal taxes, or indirectly through the insidious tax of inflation (as a result of increasing the money supply to fund nanny state agenda and pet projects).
Glad its Friday but you captured my mood!
SGD 2022 discovery of the year in the Canadian Yukon
20 million oz’s plus
*Erik also wants a royalty on Shad’s portfolio at the time of this recording.