Erik Wetterling – New Discoveries; Discussing Different Stages of Discoveries and Investing Strategies
Erik Wetterling, Founder of The Hedgeless Horseman joins us for a discussion on investing in new discovery plays. This conversation came up on the back of the Bell Copper news release commenting on drill core including pictures of the core. This more than doubled the stock price.
We discuss the different stages of a discovery, from pre-discovery to follow up drill programs that continue to grow a discovery into a true asset and resource. We tie in typical stock moves that we see at each stage of the discovery and why some investors miss out on the biggest moves. On the other side of things we outline just how risky these plays are.
looks like it is smarter to buy after drill results, than before the the drill results. Always move opposite the retail crowd, which piles in right before the release of drill results. And smart to buy immediately after good drill results. But how about buying after poor drill results and a resulting sale in the stock price? My experience has been, a company that goes up 100%+ on great results seems to keep slowly going up, a company that misses on drill results will always miss again the second, third, fourth time….winners are winners, losers are losers. Thoughts?
The statistically averaged expected value of the stock price immediately after a drill release is always lower than right before the drill release. It drops 95% of the time on bad results, rises 5% of the time on good results, and on average will be lower in price after the release, than on the pre drill results runup. After the drill results, stock is either lower in price on a miss, or rises less than it should on a hit. So in the long run it is smart to buy immediately after drill releases, not right before them. But what about buying winners vs buying losers? Only buy after a huge discovery hole news release? Buy after a 50% haircut on disappointing results? Do both? Certainly if you want to be a true contrarian, buying after disappointing results is the ultimate example of moving against the crowd.
Buying ater a 50% haircut on disappointing results, whats the logic on that?
In that case you would be far better of when you had bought before the drilling release 🙂