Advice from a professional bottom feederSo I bottom feed for 100% of my portfolio. And by bottom feeding, I mean buying securities that every analyst on BNN tells you not to buy. Some people just do 5-10% of their portfolio to dabble, but I don't believe in dabbling. I’ve been doing it for several years now with good success. Home capital, Aimia, DHX media, I was there. I try to look for companies that are rediculously cheap and that are great businesses. But sometimes cheap makes things worth while on its own.
I've been looking at Canadian oil a while now, but never understood it well enough but the dropping prices always catch my eye. I've started to nibble at VET being foreign assets. It's cheap but there are cheaper companies out there. But let me give some advice on the cycle that happens when I see a bottom feeding target.
1. Few, and by few I mean less than 1/1000, can segregate price, fundamentals, and value. I've seen it every time I've been through a cheap stock. You can do all the math, make logical conclusions about fundamentals risk, but to the average person and even expert "professional", price is linked to risk. The market is efficient. High yield means high risk.
2. Of the 1/1000 people above, having the stomach for holding a company when the stock ticker drops another 50% is another 1/1000. Mentally compartmentalizing "would you buy this if the stock market closed for 5 years" vs the reality of the fact you know it will be open tomorrow is hard to stomach. If the stock gets cut by another 50% would you still buy more? Easy to say yes today, but when it happens you either puke or get excited and buy more. You start to second judge your analysis of fundamentals. What don't I see? Am I wrong? Because no one can ever find the bottom.
3. People tell you that you are crazy. You cant brag to your neighbor because they got rich on pot stocks and Bitcoin. It's a lonely game.
I wouldn't be surprised if this goes down another $5. Maybe not. I've seen some pretty crazy things. Logic goes out the door. 1+1=0.5. but if you truely know how to add, and have confidence in your skills, the best thing you can do is buy and hold when Things go really crazy. Just as long as you don't go crazy in the process. And the solution can take a long time too. But thats why these opportunities happen. The fear of being wrong... The fear of losing it all.... The fear of going crazy.
Best,
Tickbimb