I had the pleasure of being asked to speak at PDAC immediately before the final speaker, President and CEO of Sprott U.S. Holdings, Rick Rule. I spoke about controlling emotions when investing which was part of my PhD thesis.
After speaking, I attended various media events where I had the opportunity to mingle with other speakers, writers and media persons.
Following this, I attended the Equities.com/MGX Minerals event. As you know, MGX is one of my favorite companies and I had the chance to reconnect with president Jared Lazerson (he is excited about MGX's recent news released click here).
On Monday I went to the Stockhouse party. The gathering was very well attended and I had the chance to connect with individuals I have not seen in quite sometime. The overall mood of everyone I spoke with seemed very bullish on where the price of precious metals and commodities are heading. Stockhouse led by Justin Meiklem is a very positive force in the industry.
PDAC 2017 was a well attended event. I believe we will see the attendance and enthusiasm continue to grow.
Highlights of my talk:
I began my talk with the Jack and Beanstalk fairytale and how it relates to investing:I was trying to demonstrate that emotional investing has occurred through the ages.
Here is a reminder about that fairytale story - where Jack met the old man on the road and the old man talked Jack into giving him the cow for three magic beans.
Let’s face it, on the way home Jack was one pretty happy investor. That is, until he got home.
His mom saw him and said, "You’re home so soon. You must have gotten a lot of money for Bessie!" Jack smiled and reached into his pocket and said, "Just look at these beans mother; they're magical, plant them over-night and----"
"What!" cried Jack's mother. "How could you give away our milking cow for three measly beans?" And with that she did the worst thing Jack had ever seen her do - she burst into tears.
Jack ran upstairs to his little room in the attic, so sorry he was, and threw the beans angrily out the window thinking...how could I have been so foolish!
Finally, I spoke about ways on how an investor could avoid emotional investing:
1. We need to remove emotions from decisions – In investment there is no room for emotion. One must be analytical, look at the facts and make a well thought out decision.
2. Try not to focus on short- term returns unless you are a professional trader – Try to remove the urge of looking at the stock. Be confident in your choice of investing after you have done your research and due diligence.
3. Do not fall in love with your stocks – instead just “date” them - we are ALL guilty of this. We believe that our stock will not drop because it is the best one ever! There is no perfect stock. The market will dictate.
4. Do NOT wait until break-even – Sometimes the fundamentals of the company go so wrong the stock starts to plummet and may never recover. The investor needs to remove emotion, cut the loss and move on. No one ever bats a thousand!
5. Avoid the herd mentality – Emotionally take a breath. Realize an investor will rarely sell at the top – it is wiser to take profits when other people are buying. One can wait until the price starts to dip and then sell. We all know during the dot-com boom people bought like crazy while the smart ones were selling. (That led to a lot of people becoming Broke.com!)
6. Implement stop losses – This will assure you will not lose your whole investment. Know how much you can afford to lose. Many professionals say a max of 15 percent is all they are willing to lose.
7. Do considerable amount of research on a company – from management, to balance sheet to investigating the mine/technology etc. Personally CALL the president and speak with him/her to get a feel for what they are doing. If they refer you only to the IR person, move on to a company where the president makes time for shareholders.
8. Take profits! Take profits! Take profits! You cannot lose by taking profits.
9. Consider buying into a company where you see superb management team! People make the difference and having the right team members in place generally leads to success.
10. Lastly, consider doing the opposite of what you feel emotionally. If you feel greed, it may be time to sell.
Be easy on yourself.
Happy Investing!
Dr. Kal Kotecha
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