THH – The mining sector is hard because YOU make it hard

Daily paper metal swings does almost nothing to affect the actual long term value of an exploration project. Yet daily paper metal swings can affect price in a material way. People think paper metal prices matter a lot because they see it affecting a lot of people… A lot. But that is the short term loser game. You are supposed to TAKE ADVANTAGE of how everyone else reacts and thinks. Not join in on the stupidity.

The long term value of Bear Creek Mining, my junior mining proxy of choice, has not changed much over the last several years. Yet, the price has changed dramatically. It has gone down -80% and up 400% or more several time. Again, the long term value has been pretty much unchanged because the projects have not changed much. Yet the PRICE can see extreme swings:

Pierre Lassonde has stated that he thinks the gold sector is one of the easiest sectors to make money in. Why? Because, as he said, it always goes up and down. Literally that simple.

But as you are probably well aware of most people watch the FED, rates, paper metals, macro events and almost always tries to “guess the short term paper metal price direction” and of course needing four computer screens just to be able to “keep up” with all that “important” information that is flooding the internet every single day. Basically everyone is taking something that CAN be as absurdly simple as “buy low and sell high” and instead use a hundred different “indicators” that are not only chaotic but pretty much also completely redundant.

I guess it is human nature that if ones short, medium and/or long term results are lackluster one wants to think that one is MISSING SOMETHING. When in reality it might be because one is LOOKING TOO MUCH, on too many things, that in reality is unimportant NOISE.

People take pride in having the largest amount of fancy indicators. I guess that is because a) Humans desire certainty and b) we think we look sophisticated and smart. BUT the real trick is to make ones investing strategy as SIMPLE as possible. If I had to sum up my overall investing strategy it would be:

“I try to find companies that are PRICED materially lower than their LONG TERM VALUE and I prefer them to have a long runway for VALUE GROWTH”.

That’s it. I DO NOT buy/sell based on what FED is doing/saying, how the charts look for paper metals, what I think the price is going to be tomorrow for either the metals or the stocks, nor any of the thousand possible things I see on twitter every day. I mean I literally am just buying the cheapest and best juniors I can find every time I got money to spare ever since 2015. I do NO market timing at all. I have NEVER sold because I fear that metals and miners might get cheaper. Not even when the sector was quite overvalued in 2016 or 2020. I just re-shuffle my portfolio periodically when I see a company that is cheaper than the others that I own. At the highs there might only be a handful of good companies that are not overvalued and in that case I hope I have most of my money in them.

Just think about what is easiest:

1. Follow and be able to conclude the net impact of >20 macro things and the short term metal/miners direction
2. Try to identify a company that is undervalued and should revalue higher eventually

I would argue that my long term results are good because I have such a mind numbingly SIMPLE strategy. Do you know what I do most of the time? Absolutely nothing. This is why you see me mostly posting memes, motivational quotes and stuff about investing. It keeps me busy enough to be able to NOT trade. What is an even better use of time is of course to keep reading, thinking and researching about companies and investing. THAT is work. Watching charts and noise all day is probably not only a waste of time but it is actually bad for your returns because it makes you want to be ACTIVE. I want to become a better investor every year and preferably every day. This is why I read and theory craft about investing pretty much every day.

My portfolio and types of companies I invest in have changed a lot of the last several years. I USED to bet big on pre-discovery plays which I later have come to conclude is very often a poor risk/reward bet. Furthermore it was not until two years ago or so I finally grasped just how much sentiment affects price in the short and medium term. I used to think that the market was quite rational and that price itself and direction of price contained some valuable information. Nowadays I KNOW that the market can be batshit crazy for months and years. I used to think that there was no chance in hell that a sector could literally be absurdly undervalued, with high future returns, for a period as long as 1-2 years. TODAY I know better. TODAY I know that there can be no brainer buy periods that go on for years and it is totally rational to just buy, buy, buy even though I look stupid immediately after every buy for a long time. If you are not OK with looking stupid (sometimes very stupid), for long periods of time, I do not think one will ever have any long term investing success.

At a time like THIS when prices are low, and juniors are cheap, the sell button should not even be on the board. It’s all a varying degrees of no brainer buys. If prices go lower it just means an even better buy than your last buy. It does NOT mean your last buy was a mistake simply because that is in the red. The ONLY time you buy low and do not see red is if you buy at the EXACT bottom tick on the last day of maybe a 2 year downtrend. You are NEVER going to be able to know when THE bottom is in so it is a completely waste of time to even try it.

Oh and people think that you need to “look right” immediately or you must be doing something wrong. Almost no one can even fathom looking wrong for a year and still just keep buying and HODL:ing (let alone two or three years). Yet one can look at any trading sardine and see that if one just kept buying this sector every crash, and relentlessly bought more all the way down, one would eventually be in the green as the INEVITABLE upturn came:

(No downturn lasted forever and no upturn lasted forever…)