Loading ...Interesting Insight to Consider
From Spock and Members
https://spockm.com/2016/09/20/closed-2-positions-today/
We’re buying down the value chain. NMI and MUX were and are probably great companies, but they’re on the open seas now (in the ETFs) and their stock is subject to additional forces beyond their control. The way I see it, we’re buying minnows and holding them until they’re big enough to swim in the ocean. That’s the best growth profile, even if it’s not nearly as fast and predictable as the growth of fish.
Good analogy!
…and once they get big enough to start swimming in the ocean the sharks come after them. I think this is sensible way to remove a little more risk from the portfolio.
Wait a min…. Junior explorers in general have about a one in one thousand chance of discovery that leads to production. The stated approach attempts to pick through these companies and and select the best companies and go with them. Keep in mind this is being attempted WITHOUT a dedicated geologist on staff. There is no way this can be classified as reducing risk vs companies such as MUX, NMI and the like.
Recognize buying junior explorers for what it is… a high risk high reward proposition.
Personally I have approached this sector of risk with two strategies. First with a partnership with Rick Rule which employs a dedicated geologist and second by myself owning project generator companies in which I personally know the management.
Not saying there are not other strategies out there that are valid, but this is a high risk sector and one should go into it with eyes wide open.