Trevali LessonsI recall buying this stock when it was at $1.30
The next year p/e was at a consensus of 4 or 5.
The experts on Seeking Alpha were telling us what a good deal that is.
I took somewhere between a ten percent and twenty percent loss and moved on.
A while later, I noticed the stock at about 40 cents.
The next year p/e was at a consensus of 3.
I bought back in since it dropped another 70% and they assured me it is solid financially and such a great bargain.
I was not as patient the second time. I think I took a ten percent loss and just moved on.
Now I am looking at this stock as it is making multi year lows.
Am I going to jump back in?
Of course not.
The rational conclusion is that mining is a sucker's game.
There is still so much more that can go wrong for this company.
If there is some improvement, then I suspect that a big sophisticated player like Lundin will move in and buy Trevali out for a generous 30% premium (which will still be way below the average purchase price of most investors).
This just looks like the perfect tails you lose and heads somebody else wins investment. The risks are enormous. They are always enormous in a commodities business where the price of the commodity is out of management's control. Add in jurisdictional risks and all kinds of other risks and it just becomes a sucker game. But in the odd chance we see some light at the end of the tunnel, some shark wil swallow this whole company for a bit of a premium.
These boards are busy promoting mining stocks and pot stocks and other really lousy businesses. Stay away. Focus on investing in businesses that have really strong moats and pricing power. For some strange reason, companies like Visa and Mastercard always make money without much in the way of risk. Mining companies? LOL. I am still trying to recover from that slight cost over-run of $350 Million in one of my mining investments. You see Nemaska Lithium just run a little over budget. How bad could it be? a million? two million? Noooo. It was just $350 million over budget. The schemes and really crappy businesses promoted on these boards will prove very hazardous to your wealth. I tried to warn people about Prometic Life Sciences before it went down 99 percent. They told me that I have no soul. How could I be so mean about a stock that will make the world a better place (it had not made a profit in twenty years and kept diluting). ok, guys. Keep investing in these truly crappy companies. But when you have a second, take a glance at what the five year graph of Mastercard or Visa look like.