As has been explained ad nauseum I am in 100% buy mode currently. Note that I am always fully invested but there are times when extreme opportunities pop up which can lead to an increase in re-shuffling and more importantly increased effort to get more dry powder.
Right now there are numerous juniors out there that are down some 70% from 52w high mostly due to the ever present oscillations in investor sentiment. When things go down people get bad feelings and become “Risk averse”. When things go up people get good feelings and get an increased appetite for risk due to obvious positive re-enforcements of near term hind sight. This is also why most never beat the market since one ends up buying when upside potential is diminished and risks are higher and vice versa.
I don’t know how many people I have recently seen talking about “Don’t go against the trend” and “It’s not wise to catch falling knives”. This sounds good and all in theory but is in my opinion also extremely dumb during tax loss silly season. Why? Because the stocks that are down the most already tend to get the most (artificial) punishment. Lets say a company was trading at $15 M in EV 6 months ago and you thought it was worth $30 M at the time. Fast forward to today and lets say the EV is $5 M and the company has made enough progress that you deem fair value to be $40 M in light of the currently quite high gold price…
How god damn stupid would it be NOT to “catch the falling knife” or going “against the trend” in that case………………..?
“Oh no it could go lower, I don’t dare to buy!”
I mean come on. Do you think Warren Buffett would say no to a PE4 company because he was afraid there was a “risk” of it going to PE2……..?
No way in hell.
If something is cheap it is cheap. There are no ifs or buts. Buying cheap is NEVER a mistake REGARDLESS if it happens to go lower before it goes higher.
There are absolutely no brainer buys out there and I literally cannot comprehend how anyone could come to the conclusion of it being a good idea to sell juniors since they have probably not been cheaper than this in the last two decades.
It drives me up the wall to see some people throw in the towel right now when the undervaluation across the board is so obvious that a 5 year old could identify it.
Diversify like crazy if need be but this is a lay up in terms of R/R and the tax loss silly season is nearing an end.
The Hedgeless Horseman