Erik Wetterling – Should Investors Sell Out Of Losers And Reinvest In More Probable Winners?

Erik Wetterling, Founder and Editor of The Hedgeless Horseman, joins me for a nuanced conversation around managing one’s portfolio positions in various stages of #gold, #silver, and #copper stocks, amidst the volatility in share price reactions and sector sentiment swings. We start off discussing the long stretches of time for a year or more where many stocks were bouncing along a bottoming price range, that would have given any investors ample opportunities to have accumulated cheap valuations before the big 3-month surge higher from late February through mid-May. Despite the corrective move we’ve seen for the last 6 weeks, many stocks are still up at far higher levels than where they were trading the whole year before that.

We discuss how difficult it seems to be for most retail investors to actually accumulate bearish periods where stock prices are low, causing them to instead wait until stocks have already moved up 100% or 200% before finally buying in at the next intermediate top, and then becoming jaded on the sector, instead of their own poor accumulation strategy. We talk about the benefits of averaging into positions during consolidation periods as a value investing approach, and then allowing company management teams the time needed to build value after executing on their work strategy.

Most investors are far too impatient, and want immediate results, and don’t give their winners enough time to compound, which will wash out the inevitable losses in companies that disappoint. This leads into a discussion about the converse of that, and whether investors should cut their losses on companies unable to execute, and instead potentially redeploy those funds into companies that are cashed up with good work programs and catalysts that are more probable to see value accretion over time.