⛏ Are we closer to a top or bottom?

Greetings My Favourite Speculator,

This is another Sunday edition, with your most pressing question. Here we go:

Hello dear Having-second-thoughts-er

Great question! Let’s address it bottom to top.

First off, it’s important to know why you’re selling a stock, just as much as you must know why you’re buying one. We surely don’t want to dissuade you from “shuffling” here and there, but it’ll pay dividends (at least figuratively) to define reasons other than boredom.

Maybe filter your stocks with these questions:

1- If I had some extra cash, would I buy more of this?

2- Has the company gotten better (fundamentally), but the stock price gotten worse?

To this we say, it’s either a screaming opportunity or you don’t know what you don’t know.

Meaning, in this never-boring business, there’s a lot of chatter and important information that isn’t material per se but may prove useful, i.e. the CEO is having alcohol issues so you think the board will remove him, and with him a powerful financial backer who is golf buddies with the CEO (totally theoretical, may or may not be based on semi-true stories).

In this case, it’s good to visit forums, ask your broker (if you have a full-service one focussed on mining), ask on Twitter and check your DMs for people who may know something you don’t.

Of no less importance is to google and research the area where the company’s flagship project is located. It may be extremely secluded, too close to a town, too close to a national park, etc.

Sniff out potential former issues that may linger such as indigenous disagreements, access to water, etc.

But we digress.

How to know if you’re closer to the top or the bottom of a thesis?

Good old economic fundamentals: supply and demand. These are the forces that start a bull run and end one - sentiment is the ingredient that adds spice to the dish by making it run harder through speculation and dump faster through desperation.

If you’re in any commodity:

• What are the numbers behind the supply and demand model / estimates? How are these going into or away from equilibrium? How’s new supply going to suppress prices? How’s demand going to lower?

Essentially, you can front-run the sentiment speculators, short-term traders and Johnny-Come-Latelys by studying and keeping an open eye on the supply and demand story - and more importantly, the future outlook regarding these numbers.

The market can be chugging along beautifully, but the news that the Chinese are going to halt exports of unobtanium* may trigger a bull run as the news comes out, not as the imbalance actually happens. That comes later.

The market is forward-looking, and so should you be.

Hope this helps!

Happy speculating (responsibly),

The Editor

*completely made up element

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational/entertainment and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.