Matthew, you’re the guy, who after being cleaned out repeatedly at the casino, with only loose change left, throws it all in the penny slots hoping to break even. In your case, it’s the penny dregs.

And as stated here earlier, Las Vegas has much better odds on Craps, Roulette, or Blackjack (48%) than most retail investors do in junior penny stock explorers, where only 1 in 3000 drill targets ever become economic mines and viable revenue generating businesses.

Jon syl – While I did say that about Las Vegas odds on craps, roulette, or blackjack having better odds, I meant that more as a reflection of people plopping their money in a penny stock one time on hot tip with very unlikely odds of success. If one compares that to someone plopping their money one time on betting on black/red, or even/odd on roulette or the point number if it is a 6/8 or don’t come for the 7 on craps, then those odds are about 48% (so almost a 50/50 bet but still slightly in the house’s favor). Over time, people just indiscriminately plopping money on the line with no strategy or risk/reward mitigation will lose their money, but they’d have better odds in Vegas.

However, there are ways to increase one’s odds of success to make the investing much more probable. For example, if one uses technical analysis for buying oversold levels for entries or averaging into a position, and utilizing overbought levels to sell or lighten up on position, then one can greatly improve the odds of making money using the volatility as strength. Sadly, most won’t do that and typically most buy emotionally into the frenzy at overbought levels, and then hold for years as jaded bag-holders… blaming the company management or the project or manipulation or many other things other than their own poor choices of discernment for what and when and at what level they were buying or selling an equity.

In addition, if one understands some of macro forces acting upon a sector, then there are times where it is easy to see a mega-trend developing and position accordingly, but few will do that. A few years back it was obvious uranium stocks and lithium stocks were going to head higher, and there were megatrends in place that are still playing out today, but most failed to position accordingly. Most herd investors will only jump into a sector as it is peaking and generating headlines in the lame stream media (which is the end of a move and not the easy money any longer).

More importantly one can track key developments within a specific company that are being underappreciated by the market. It’s not a great timing tool, as those kinds of price to value arbitrages can persist longer than it makes, sense, but eventually a re-rating and a return to the mean is in order for those that are patient. Same thing with peer comparables where something is looking like a compelling value in relation to similar companies, or historic valuations. If one uses that kind of research to spot the right kind of risk/reward scenarios, and then layers in technical analysis for entries/exits then they are starting to skew the odds in their favor.

Then there are also key news catalysts for companies that can represent interesting value opportunities for those paying attention and following along early on before things are more obvious. With mining stocks this may be something like a new exploration discovery, infill drilling leading to expanded resource estimate that is underappreciated, an economic study with key revelations or a new approach to developing a project that is more economic than previously assumed, or even production growth from additional stopes, additional pits, increased throughput due to improved process, higher grade ore compared to historical, etc… just as some examples. Sometimes a stock will take weeks or even months for enough investors to finally wake up to the key news that was announced in the past, and bid up a stock to finally re-rate it higher. In those scenarios the early-bird gets the worm, and those that act decisively when they see significant news can be richly rewarded.

Keeping track of the technical pricing levels and trends, looking at valuation arbitrages, and scanning for key news that builds value that is still flying under the radar give investors a serious edge, on capturing a few outsized gains and making up for the inherent risks that come with investing in juniors.

Then there is the ability to utilize diversification and risk mitigation in one’s portfolio by investing in producers with known resources and actual gold/silver/copper/nickel/uranium/lithium/oil/natgas in the ground. These aren’t going to have as wild of explosive moves up, but they can have fantastic leverage to their underlying commodies, and greatly increase the odds of success when a sector move is underway. For example, coming out of the September lows GDX and GDXJ shot up about 65% in just 6 months, while many juniors didn’t really move much or actually moved lower. Those indexes are diversified and have between 50-100 stocks in them at any given time (mostly producers, royalty companies, and the largest and most liquid of the developers), where some went up more and some went up less, or maybe even corrected down, but clearly most were up double digits, and some of the best plays were even up about triple digits.

As someone that has a big allocation to the producing stocks and royalty & streaming stocks, I’ve learned over a dozen years in this sector that those more visible revenue-generating companies are going to get a bid first at turns and pick up capitalist money because companies with production can immediately monetize the higher prices in their margins. For this reason, the larger cap companies are going to attract new generalist money earlier on in a bullish move, way before XYZ drill play is going to attract their attention.

We’ve seen many examples of this over the years, but even saw it over the past few years with COPX and the copper producers having nice leverage to rising copper prices, even when most junior copper stocks never got off the mat. People with copper juniors complained about the sector sucking, and meanwhile investors in the copper producers found inside of COPX had fantastic gains. Producers are not seen as sexy (due to a misunderstanding of the Lasonde Curve where people feel they are already fully valued and depleting to mine closure), instead of understanding the many ways a producer can keep growing through exploration, resource expansion, better mining methods, and mergers and acquisitions.

It has always seemed quite strange that so many investors avoid the actual companies literally pulling the commodities out of the ground and with the most sensitivity to rising prices. OK so someone is bullish on oil or nat gas or gold or copper or lithium… so then why in the world don’t they own some of the production companies pulling those commodities out of the ground then? (it’s crazy) Companies that are producing see an immediate impact from rising prices to their revenues and free-cash flows, which then provide more options for growth organically or through acquisitions. From a business standpoint, overall revenue and production growth is far sexier than the perpetual dilution of pre-revenue companies, and yet, these companies are under-represented in so many portfolios.

I talk with resource investors all the time that are bummed out at their personal severe underperformance, and then upon just a little probing find out they have a portfolio of mostly high-risk drill play exploration companies, many of them greenfields hopium marketing stories, and thus far with no measured or meaningful commodities proved up yet in the ground. Being in a bull market for gold or silver or copper or oil or uranium or whatever is no guarantee of performance at all, especially if the company one has invested in doesn’t have any of it quantified in the vault of the earth. Just because a commodity price is moving higher doesn’t mean that an early stage drill-play will participate at all, and quite often they can even still go down in value (like we’ve seen the last 3 years) even with respectable metals prices, because on the micro company level, they are perpetually diluting the snot out of existing shareholders, all with the hope that they’ll take the capital and build more value than the dilution they’ve caused at each capital raise. The reality is that few companies build more value than the dilution they cause and so what is happening in the underlying commodity is of little significance as a pre-revenue company with no proof that they even have an economic deposit yet.

While so many retail investors only want to swing for the fences with long-shot drill plays, the reality is that most producers of any commodity, will move higher with any sector strength. Yet many investors shrug off investing in producers (sometimes not owning any in whatever their commodity of choice is), in lieu of taking the speculations on the micro-caps for the dream scenario of multi-baggers, but they are taking on way more risk in that kind of lottery approach. Investors that have shrugged off the commodity producers over the years (especially the smaller to mid-sized growth oriented production companies with real value creation going on), have done so at their own peril.

One can even simply utilize the ETFs directly in their portfolios as heavily weighted positions to smooth out the volatility and risk of speculating in other higher risk/reward penny stocks. Personally, I want exposure to some of the sure winners in the stable that will at least go up over time on better commodities prices and better sector sentiment trends, and can’t imagine going into a particular commodity bull run (gold, oil, lithium, uranium, whatever…) without a basket of growth-oriented producers or royalty companies. The point being that anchoring one’s portfolio with some of the best growth companies with proven ounces or pounds or barrels in the ground is another way to greatly improve one’s odds of solid performance during bullish periods, while also shielding one’s portfolio from less downside risk during corrective periods.

So there are a number of different strategies one can utilize to improve one’s portfolio performance even in a very high-risk and challenging sector like investing in resource stocks. Sadly few will take the additional time and energy to put in the work to really design a portfolio of stocks that captures upside, but also mitigates some of the downside risk. Many will fail to keep up with key sector developments or company specific news when it is not in vogue. Many are always asking others what they think of a company (reliant on the opinions of others) instead of developing their own personal skillsets and specialized knowledge to know how evaluate an opportunity for themselves, or to spot an important company development early on before it becomes more obvious over time. Lastly, many investors fail to utilize technical analysis for assisting them with when to accumulate or distribute shares, dismissing it completely, and then pointing to others (corrupt management, something wrong with the deposit, market manipulation, etc…) as the reason they fail to win at investing, instead of their own lack of knowledge and utilization of tools like TA.

As a result of failing to approach their investing with a tailored risk-adjusted approach, where they are stacking the odds more in their favor, then obviously many will fail at investing in resource stocks, and/or in investing in general (regardless of the sector). Let’s just think back over the last 2-3 years where PLENTY of newly minted investors got torched playing with speculative fire in the Cannabis stocks, Cryptocurrencies, with NFTs, with Growth-Tech stocks, SPACs, Stay-at-home stocks, Vaccine stocks, Biotech stocks, Meme-stonks, etc…. I’m sure we’ll see the same thing eventually in some of these crazy AI valuations lately… just like the DotCom bubble of 1998-2001 popping where some survived and many died. There are plenty of bagholders in many different sectors, and again, many of the index stock investors may have greatly outperformed their stock picking or option speculating peer investors, because it is tough for people just throwing darts at the latest trend without any further work put into it to make money consistently investing. They may get lucky for a period trying to jump on the latest greatest trend, but they rarely can replicate it over many years or decades without having a systematic process or strategy that they use to stack the odds more in their favor.

Ex:

You have just said a mouthful about investing but almost 99% of the people who buy stocks won’t even read that much on investing in ten years let alone digest and try to understand what you are telling them. They think investing is listening to the guy who tells them to buy XYZ company and you will be a smart investor and then if you ask them why they own XYZ they can’t even tell you who is involved in management or any basic fundamentals of what the company is doing. Sometimes they will mix up the company that they are investing in by getting the name wrong, I have heard it here where Cartier Resources is being discussed and the so-called investor say’s ” I own that stock here is an article that talks about their project and when they post a link to that article it is for Cartier Silver. Then out comes the excuses, investing is not easy you must work hard to even tread water, but of course you are a smart guy because you bought company XYZ without knowing anything about it. It is all too stupid, and people get what they deserve which is a government that looks after them with their money, until it can’t anymore because it too has become morally and financially bankrupt.

I could go on forever, but it never does any good because when the pain of a broken system comes the public like the investor will point his finger at the other guy and still not try to understand what really happened by educating themselves. Time and time I have heard that same retort “How Hard Can It Be” only to watch the person who thought it was easy fall flat on their face and fail to realize that the fault is their own. Standing up as a responsible person is only the first step and the easy step but still “How Hard Could It Be”. DT

Good points DT. Well, one of the main points was that most investors won’t spend the time and energy to really learn how to stack the odds in their favor. If they are too lazy to read for 5 minutes for some ideas on how to do that, then they are simply proving that thesis in spades.

Most people won’t do the work to develop any skillset – be it playing a guitar, painting, archery, auto maintenance, etc…. and investing in resource stocks is no different. I used to train and coach people to start their own part time insurance business and work to build it into a full time income stream, and I knew each time 9 out of 10 people would give up in 2 weeks to a month, and not put in the work needed to succeed. Then when it doesn’t work out for them, they blame everyone else but themselves.

Similarly so many people want to be great at investing right out of the gates on a few hot tips, to get rich quick without growing the specialized knowledge, a systematic approach, and experience to become a long-term solid investor and trader. I had friends that in 2021 piled into cryptos and meme stocks and biotech and even were being very cavalier with using options and thought investing was a piece of cake. Then by 2022 they’d lost all their profits and most of their seed capital money, because they didn’t have a strategy or experience and weren’t using the many tools available for fundamental and technical analysis for valuations. Now they are not investing anymore at all, and left the markets jaded thinking it’s all rigged. Well… that’s what makes a market.

You’re not even close to accurate. I have plenty of positions that have nothing to do with the juniors or even the sector. They simply don’t get the same attention because this site is all about the speculation and the juniors as far as I’m concerned. I hardly mention my active trading in larger caps and ETFs.
Regardless, you’re clueless when it come to speculation and will remain so, your personality guarantees it.

The above is for jon syl in case that’s not clear.