Thoughts from Myron — A Historic American Treasure
by takeprofits | March 6, 2014 8:40 am
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Source URL: https://www.stockgumshoe.com/2014/03/microblog-thoughts-from-myron-a-historic-american-treasure/
I’m new here but here’s my answers to your quiz.
1. $5,000
I’m betting many of us have a far ranging amount of funds available to invest. While $5,000 may be a lot for some investors here, for others it may only be a drop in the bucket. Considering a percentage of an investors funds to risk under this question may be better than a $ figure. Just my $0.02.
2. All things being equal, I’d spread the risk over the 5 positions.
3. I’d invest in stocks where the fundamentals show great potential rather than chase one hitting new highs. I may have to sit on it longer but chances are, it’s just a matter of time before the market realizes the value of a stock with great potential.
Well reasoned for the most part and welcome to the forum. I must admit to not being as clear as I should have been in framing my questions. My thinking in asking #1) was which makes more sense from a risk/reward standpoint, buying 100 shares of a .50c stock or forking out $5000. for 100 shares of a $5. stock? Your choice of number 2 makes sense, the bottom line being you could buy 5 /.50c positions with half the total dollars at risk while improving your odds statistically of generating higher returns. Any number of studies have shown over the years that penny stocks have higher returns than blue chips or even mid caps. Your answer on 3) would lead me to believe that you are a relatively conservative investor and in general I agree with your reasoning, however there is also a case to be made for a stock hitting new highs to CONTINUE making new 52 wk. highs, (an object in motion) is most likely to continue unless conditions change.
Sorry that should have been a 1000 shares of a .50c stock or $500. total investment., and equally a $1000 shares of a $5.00 stock where you have $5000. at risk but only ONE chance at a double compared to $2500. at risk with 5 chances at a double or whatever your target is.
Myron, as a fellow Canadian, I’m wondering what method you use to buy USD for investment in US-listed stocks? Do you use the ‘norbert’s gambit’ method, pay the 1-2% brokerage currency exchange commission, or have another, better way? Can you enlighten your fellow Canadians? Thanks for everything. If anyone else has suggestions for Canadian investors, please speak up! Ryan
RYAN: Good question, and I may not have thought this one through thoroughly enough because until quite recently the Canadian dollar was basically at par with the U.S. so was not of major concern. A few years ago I held American stocks in a U.S dollar account but decided it was too much hassle and so reverted back to holding everything in my Canadian dollar account. Basically I do not trust the U.S. dollar, its long term trend is DOWN, therefore I feel more comfortable holding all stocks in C$ in spite off occasional surges in the U.S. because of the temporary flows into the U.S dollar when there is stress in the system. In short I have more faith in the Canadian bankers than I do those in the U.S. who I regard as so corrupt and manipulative that they are likely to bring down the whole world wide Central Banking / Central Planning system. I consider the Federal Reserve to be one of the most corrupt (Ponzi scheme) organizations in the world. While the advice “not to fight the Fed” may be sound in terms of “going with the flow” in terms of market timing, long term I am betting that if they continue on their present path they will eventually blow up the system because it is so structurally flawed it is mathematically impossible to ever pay the pyramid of debt they have created in any kind of sound money, it is only a matter of time before the system crashes.
Agreed – with respect to the USD. I have ETFs both hedged and unhedged for our dollar, which has paid off in the short term with the CDN decline to $0.90. I do like to keep my money close to home though. If you google ‘Norbert’s Gambit’ you’ll find an interesting way to exchange currency without the broker’s automatic 1-2% commission. Essentially, you purchase a stock (such as the US dollar ETF ‘DLR’ listed on the TSX) and have your broker journal this stock to the US dollar version of the same (still traded on TSX). Then you sell, with the sale currency being USD. This avoids a set percentage for fees. For smaller transactions this won’t pay off, but for large exchanges it will. It all depends on your broker’s buy/sell commission. To convert $10,000 to USD normally, a 2% commission would cost you $200, whereas using norberts gambit, it would cost be just the buy+sell commission (questrade ETF purchases are free) and the bid/ask spread for DLR/DLR.U.
Comments welcome!
There are indications that the CAD will be a much stronger currency than the US$ will be. When? I guess that such might occur within two years. Therfore, it behooves me to invest in Canadian stocks with CAD if I can.
Bud Wood
It might, though it’s hard to predict the decline of modern currencies other than to say that they should all decline in value versus hard assets over a very long period of time … movements relative to each other, like the Canadian$ versus the US$, are awfully hard to predict, particularly for two countries that are locked in tight economic correlation like the US and Canada. The CAD has been more valuable than the US$ for two periods in my memory, for about 15 minutes in 2007 and then off and on from 2011 through much of 2012, it peaked a little over US$1.05 in 2011 and bounced around and got over $1 a couple more times in 2012 before turning down again. Before 2007, to find times when the Loonie was as strong as it’s been over the last several years you’d have to go back to the 1970s.
A couple of things vis-a-vis Canadian stocks, currency. 47% of my portfolio is in US stocks, 37% in Canadian stocks using Canadian $. A very good way to invest in foreign stocks for me is to do it via Interactive brokers where I have my account that handles all foreign trades. Their exchange rates are excellent. I have an account at Fidelity and found their exchange rates much too high which is why I moved all my existing Canadian and foreign stocks to IB.
Thanks for the info, had not heard of “Norberts Gambit” before so a forum like this is an opportunity to learn from the collective wisdom and experience of many individual investors.
http://canadiancouchpotato.com/2013/12/03/norberts-gambit-the-complete-guide/
and for those Canadians who use Questrade:
http://www.moneygeek.ca/weblog/2013/10/18/how-exchange-usd-cad-cheaply-using-questrade/
Jeb seems like a nice guy and I think LODE has great potential. But it is probably worth mentioning that he is PAID to promote Comstock Mining. They are a sponsor of his website and newsletter, so his view is not exactly unbiased and objective. He might not be paid by a big publishing company, but it is a little misleading to suggest he is independent or unbiased in regards to his stock picks. I prefer analysts that are not compensated by the companies they are writing about. The conflict of interest is glaring.
I appreciate your point of view, but as is usually the case, there are often two sides to a story.
This is a little bit of a which came first, the chicken or the egg? While I do not know the answer in this case. It certainly makes a difference whether JEB researched the stock on his own, profiled it because he thought it was a well managed company with a great project, bought the stock because he believed in it and then sent the company a copy of his write up and invited them to become a sponsor of his website. I see no problem there, the advantage for a subscriber is that JEB can charge his subscribers LESS with some corporate sponsorship than if he had to rely solely on subscription fee’s. In my own case, without profit from my personal portfolio I could not afford to put in the hours I do researching stocks if I relied solely on what Travis pays me. If he paid me a full-time salary as the big publishing companies do their analysts, I assure you he would have to raise his own rates. Which mining company would you prefer to invest in, one where management are simply “hired guns” with no skin in the game and paying themselves ridiculous bonuses while paying the shareholders squat in dividends, OR, a company where management has been previously successful, and invests their profits from previous successful endeavours into a new company where they hold 20 to 50%, considered “tightly held” so their interest is aligned with general shareholders? EXAMPLE: At PDAC I had lunch with other shareholders of McEwen Mining which is 25% held by Rob McEwen who was responsible for the development of Goldcorp considered one of the premier companies in the business. Rob is as down to earth as before he became a multi-millioaire.? He is extremely cost conscious and very tight fisted in running his new company, very conservative in respect to how company decisions will reflect on shareholders, WHY? because he only pays himself $1. in salary and so benefits only to the extent that the shareholders benefit along with him. I offer in contrast one of the worlds premier gold producers (Barrick) who recently paid an $11. Million dollar SIGNING BONUS to get a new CEO they thought might be able to turn the company around after all the mistakes and resulting write-downs they have had to deal with.
Now I ask you, which management team would you bet on, one that has a “entitlement bias” that is intent on enriching themselves first and foremost, or one that has a subscriber focus that makes sure the company is strong and rewards shareholders equally to their own interests?
You say you prefer analysts “that are not compensated by the companies they are writing about” and that is your right, and it seems logical,, but it may not be quite as simple as you portray it. For example, with paid analysts, by as you describe them, “big publishing companies” is this not what you get? A constant stream of lies by offering reports “for free” that go on for pages HYPING an undisclosed stock, (which keeps Travis in business) and only after the “teaser” is nearly over do they finally disclose that their reports are not really free, (meaning no strings attached) but you have to buy their newsletter to actually get them, so my question is, how trustworthy is their information if they have to use misleading and deceptive words to get your attention? How do they get away with this blatant hypocrisy? Their lawyers tell them that as long as they offer a money back guarantee they can in effect, “get away with this blatant deception.” Bottom line, it is the integrity of the individual that counts. The other thing you get from the big investment newsletter publishers is daily columns that rarely offer specific stock picks, mostly they are designed to upgrade you to a more expensive publication, they get you on board with a cheap subscription of say $39. hoping to upgrade you if you are not satisfied with picks offered. in their entry level newsletter. I view the conflict of interest from a different perspective. Would you not feel more comfortable investing in a stock that the analyst is buying for his own portfolio? I submit to you that if my scenario regarding JEB as outlined is correct, then it is not fair to say he may be biased and less than objective if he obtained the website support AFTER he had already chosen the company and invested in it. If on the other hand the company offered him money and or stock/warrants as an incentive to do a profile of the company, then indeed there is a conflict of interest, so unless you have evidence to prove the latter, I consider it unfair to employ the broad brush of conflict of interest, it really comes down to the integrity of the individual. I did not write my profile on LODE based on JEB’s opinion, I did my own research after following the company for a long time and only included Jeb’s interview with management as a supporting resource as a “second opinion” from an independent analyst I have learned to trust over the years, in contrast to the many paid analysts that jump around from one Agora affiliate to another.
In certain circumstances your point could be well taken. Two things to consider, which came first, the chicken or the egg? If as I suspect,having known Jeb and following his writings for quite a number of years he wrote up the company initially because he liked it and bought it for his own portfolio and THEN asked the company whether they wanted to become a website sponsor, I see nothing wrong with that 2) The benefit of such an arrangement is that the retail investor can be charged LESS for a subscription if the mining companies are in effect picking up part of the tab in covering the cost of running a website. Ultimately it comes down to the integrity of the individual. If you are implying that he is not unbiased if he was paid in advance to write an article favourable to the company as opposed to doing the research for purposes of his own portfolio purchases then I would agree with you. No doubt that there are some website operators where such things go on, I just do not believe that is the case with Jeb otherwise I would not have posted his interview with the CEO. I hoped you noticed the “disclaimer” that he owns the stock and that the company IS a website sponsor.
1. $5k
2. 5 stocks unless one has a compelling value proposition to go all in.
3. Potential over 52 week highs that don’t seem to mean much anymore.
I would like to see more information and updates of specific stocks that are developing software, etc in the cyber attack sector. I realize some have been mentioned on this site but new companies continue to evolve. My portfolio consists of 40% biotechs / healthcare, 15% financials; 20% energy and the rest in technology. Hope this helps and perhaps this will get favorable comments from irregulars.
Hello Myron,
What do you think about your past stock recommendation:
MUN: haven’t been performing that will. It seems like it’s on moving trend somewhat..
VTI: Did you end up buying more of the share?
BXE: bumped up nicely today over the material reserve increase.
One thing I have trouble trading stocks is I can’t seem to find a right time to sell.
I’ve posted a post on discussion section, but nobody really gave any input.
What triggers your sell position?
Steve, I am with you. Myron is absolutely amazing and I love his straight forward no BS approach. Since I started following his posts about 4-months ago I am in:
UUUU up 103%
MGPHF up 120%
BALMF up 5% (so far)
Myron is the best and one hell of a teacher. I’ve learned more from him than I did in any of the 5 subscribtions I used to have and discontinued.
You are right John, for most people it is all to easy to buy, but difficult to sell unless you are a “Nervous Nellie” (not trying to pick on women, plenty of men have the same disease) ready to dump a stock with every twitch of the market. One of the biggest lessons to be learned to be a successful investor is !) do your due diligence thoroughly, so that 2) you have the courage of your convictions, and 3) you do not allow the daily “background noise” the market creates shake you out of solid long term positions.
What triggers a sell position you ask, 1) one would be any fundamental issue that would seriously derail the companies business plan. 2) Depending on market situations having a disciplined sell strategy at certain price or percentage points such as selling a 3rd of your holdings at a 25% to 50% profit. 3) Take personal responsibility, in other words, know your stocks well enough to be able to make logical unemotional decisions no matter what the market throws at you.. To date I have no stocks bought in the last 10 months that I deem should be sold, based on my premise that any stock that has been thoroughly researched should be given at least 6 months to prove itself, and some like VTI might take a year.
Trailing stop (usually 25%) has helped me keep gains. If a position goes up 100%, I sell half and play on “house” money. Wish I hadn’t sold half of BIIB, though.
Hi Myron,
Thanks for giving all the detailed information. I appreciate it a lot.
Answers:
1) $5,000
2) Spread it across 5 stocks
3) Good fundamentals
I’m extremely happy with the past info you gave about ANV, AVPMF, BALMF, BRIZF, GLBXF, LRSEF, MGPHF, UEC, URZ & UUUU.
Until I started reading Stock Gumshoe, I had that terrible habit of “keeping the dogs and selling the winners”. Thankfully, that’s behind me. However, I have a different problem: how do I decide which of the winners to sell in order to buy the companies that are very good buys now (hopefully before their run)? I’m in the same boat as the previous poster John Park.
No matter how much capital you have, all will struggle to some degree with making choices on how best to allocate that capital. Every month I face that battle myself. I usually have at least a dozen stocks every month that I would like to buy, but only have enough capital to maybe buy two at most. There is no magical formula and each investors priorities may differ. The basic general guidance I would give is to take predetermined profits when you have them. There is nothing wrong with posting stink bid buys and sells to catch intraday swings. For a hypothetical example, suppose you have a stock that you own, or have been tracking for sometime and you see a consistent channel between the stocks top and bottom over weeks or month, by placing a stink bid say 10-15% above its highest bid you may get your bid filled by someone placing a market order instead of the limit orders I always use except in special situations where I have valid reasons to want to get filled immediately. When your stock sells, but you still like the company you can place another stink bid buy order 10-15% below the established previous lows, and hopefully get filled again, taking advantage of the markets volatility instead of being a victim of the natural oscillations in the market. Of course you have to consider your trading cost, size of your trade and other factors to determine the potential profit. Other ways of adding to your income is selling covered calls on stocks you would prefer to keep or give you a known profit by the strike price you choose above your buy price PLUS the premium for selling the option. Enough interest and I can provide more details or you can get more details by googling covered calls and getting precise details.
Myron, I, for one, would appreciate an article on options. Thanks.
Thank you for your column, Myron, and for the work that you put into it. I learn something from each column.
My answers to your questions –
1 – Would not the answer to this question depend on one’ resources? I have 10 % of my resources in speculative stocks. I maintain the 10 % as the portfolio grows. So far I have not adjusted the percentage when the portfolio total dips.
2. For me, splitting the speculatives into several stocks is best. I try for the “maximum possible result”, rather than the “maximum result possible”. Or, paraphrasing a Gumshoe member from another article, “I swing for the bases, not for the fence”.
The 10 % basket holds 20 stocks. I used my “judgment”, such as it is, for determining the number of shares (ranging from 200 to 2500) and the purchase price (from $0.15 to $2.60) for each stock. The speculation basket is up 19 % (over 8 months, since I started reading your column) , and the core stock basket is up 26 % (over 14 months). A third basket, the miscellaneous one, is up 15 % (over 2 years). (Curses upon thee, CSCO, QIHU, FTR, SCMR, and Kramer !! )
3. I’m not a momentum player – and I’m still learning about fundamentals. I have based my purchases on hours and hours of reading.
After reading the above prior to posting, it strikes me that 20 speculative stocks is too many. I should try for a few doubles instead of a bunch of singles. I will work on this as I develop more confidence in my research and judgment .
Thanks again!
Hey Myron,
Sicne you’re the “go to” guy for micro cap mining stocks I was wondering what your opinion was on Falco Pacific Resource Group? Thanks.
Thank you Myron for genuine insight.
In answer to your question.
$5000
Invested in five stocks
Stocks that show good potential (after reading your homework assignment but not started it yet I am questioning if this is the right approach).
for instance I replied on your last newsletter on UUUU and UEC and a couple of others. I went back into UEC after selling for a loss and have made that back + some. I was able to get into URZ and am up there, as well as adding to Denninson Mines. I continue to watch UUUU go up without an entry and still wonder “do or don’t I” as it continues to make new 52 week highs.
I am quite happy with your suggestions and my success with the other stocks you mentioned and look forward to your newsletters. Now off to do my homework.
Thank you
Hi Myron! I visited Your Website. It seems as though there
haven’t been any updates since September 2012?!? Am I
mistaken? Please advise with thanks…
Well, your first question is hard for me to answer as my answer begins with a highly irresponsible number like !00% of my portfolio spread between two accounts is in high risk stocks. I am constantly seeding, weeding and harvesting so liquidity is an important issue and as mistakes expose themselves, I dump quickly. I also tend not to invest in anything except minerals and Energy. I also never chase a stock that I have missed the boat on. However I will add to stocks that I have a position in that reach new highs. That means the ones on your list that I own and am buying are (American Symbols) DNN and URZ. A third one which should have made the list but missed by a couple of pennies was FCUUF. All are uranium stocks. I also had UUUUU and dumped it for a small profit when they changed management and the stock had a severe drop overnight. Oh well we all have to do what we are comfortable with. I am up about 35% since January 1, mostly on picks I have selected from your picks and occasionally Travis. Right now I am mostly in cash as I don’t trust the market stability but cash does not produce a 35% return in two months so I know I have to get back in. I have also done well on my joke stocks which include ADHD, PHOT and a few more. As to the newcomers, my worst sin is still selling early. I have hit 100% several times but doubt I will never see a ten banger because I will take the sure profit on the first dip and seek another undervalued stock.
After I wrote the above I saw the following in a Stansberry email promotion:
The 3 Secrets of Self-Made Billionaire Investors
By Dan Ferris, editor, Extreme Value
1. Don’t diversify
2. Avoid risk
3. Don’t care what anyone else thinks
The only thing I am missing from his list is about 999.9 million. Must be a couple more secretes he hasn’t discovered yet.
PHOT get back in…
Still in said it was one of my Joke winners!
Still in said it was one of my Joke winners! But watch out a good ADHD drug would probably damage PHOT so I am pulling my first hedge by buying both sides. (joke, hahaha)
Myron, only one of the five stocks you gave us to research is listed in the States by the ticker symbol you used. That stock is URZ, which I bought after your review, and is up 28 % since the purchase.
However, in the States, MSL (Toronto) (Merus Labs International) is available on the NASDAQ as MSLI and is a specialty pharmaceutical company.
According to its website ( http://www.meruslabs.com/ ):
• It currently has only two products – one for treatment of urinary urgency and incontinence and one for treatment of C. difficile infection (CDI). It plans to grow by acquiring and licensing novel pharmaceutical products, and has an European subsidiary established to manage European product acquisitions.
• The management team seems to have the right experience. [ What else could their website say? :>) ] Elie Farah, the CEO & President joined the company in 2010; Andrew Patient was appointed Chief Financial Officer in 2010. A Google search for Elie Farah leads one to Bloomberg Business Week, which lists his background in some detail. ( http://investing.businessweek.com/research/stocks/people/person.asp?personId=1084861&ticker=TTH:CN. )
• For the year ended September 30, 2013, the Company incurred a net loss of $3,102,129 compared to a net loss of $20,720,548 for the year ended September 30, 2012. ( http://www.meruslabs.com/pr/merus/12.30.13.pdf ) It looks like the losses are going in the right direction.
• For the three months ended December 31, 2013, the Company incurred a net loss of $1,885,761 compared to net earnings of $297,541for the three months ended December 31, 2012. ( http://www.meruslabs.com/pr/merus/2.13.14.pdf ). (Bummer, Dude !! ) I’m still trying to get my head around the $1.5 million difference. The company attributes it to, “Larger than expected orders placed in the last fiscal quarter of 2013 resulted in lower than normal Enablex® ordering and associated revenues in the first quarter of fiscal 2014. “
According to MarketWatch.com there has been no insider trading, and the company is being followed by 4 analysts, all of whom have a “Buy” rating. The Average Target Price is $2.79.
According to Scottrade, the market cap is $66 million, average trading is 3880 shares per day, and the P/E ratio is not meaningful.
The stock was hovering around $1.00 in 2010. It climbed to over $2.00 in 2011 after Elie Farah, the CEO & President, joined the company, then to $2.50 in 2012, and then fell to $0.50 in the Spring of 2013. Since then it has meandered up to about $1.70, with most of the meandering taking place in the past month.
I know very little about the pharmaceutical industry, but I like the niche this company is in and their plans for growing. I also like the facts that they already have two products that are doing well and that they have an European branch to help their growth there. And, of course, I like the four “Buy” recommendations.
Would I invest in the company? I don’t think so. I did not see any catalyst that would spur their growth and there has been no recent news about the company. But I have put it on my watch list.
By the way, I think that it is a positive that the recent growth has occurred without any news.
O.K., GumShoe-ers and Gumshoe-esses, any thoughts for other ways to do “Due Diligence”?
Myron, we’re about the same age. Here are my responses:
1- 5,000 2-split over 5, well researched equities 3- Fundamentals that show great potential
This is how I currently invest. I have 2 decent sized portfolios with about 123 positions: 18 in agriculture, 27 in energy, 8 in base metals, 28 in precious metals which totals 81 positions. The balance is spread out in Banking/Finance, Biotech, Technology, and miscellaneous. /* Phil */
Myron: Surefire method… 1. Buy stocks which go up 100% or more & sell before drop. 2. Don’t buy stocks which don’t go up 100%. I have some small difficulty in my execution of said rules.
Took a position in Comstock Mining (LODE) and it has fallen on it’s face in a 2 week period.
Could your recommendation have been that far off or are we coming back?
Chuck: Comstock is a solid stock with great potential. I make my buying decisions based on thorough research and conviction that a stock has a potential for a double within 2 years.
If you obsess about a stocks movement over 2 weeks not only will you drive yourself crazy, if you respond emotionally to a pullback by selling you will destroy your portfolio with trading costs. Overtrading is the major factor that will drain you portfolio. My question is, how much “due diligence” did you do on the company, how strong were your convictions on the companies growth potential over the next 2 years, did you use a stink bid to get the best price? As stated previously, I give management the benefit of any doubt for a minimum of 6 months, temporary market sentiment has little influence on my assessment.
Have you considered that the gold bullion price, which naturally has an influence on gold stocks, has had a very nice run-up over the past month, so now that it has pulled back with profit taking, you apparently just bought with unfortunately bad timing. I consider this a normal correction that is a BUYING opportunity. Six months or a year from now I doubt that you will be unhappy having bought the stock unless something out of the ordinary happens.