RE: How being a contrarian investor is a mental stamina test!
Hi Al
I think that you're likely to be more qualified to answer this question than I!
The number one metric I've been using is no. of shares in existence simply because some of my picks are either pre production or are investment firms (hold stakes in other miners). I also look at the balance sheet to see the cash in bank (although BS are just a snap shot at a particular point in time). I also look at where they are operating.
I like picking some beat up firms if I think they've reached a bottom but appear to have potential. Arian Silver Corp is an example of this. However, I've noticed recently that they've started to issue more shares which touches upon a point that I made in a prior blog about share dilution.
So whilst I'm confident in my ability to identify sectors where the fundamentals are right for a turnaround (e.g precious metals, rare earths etc). Picking stocks is another kettle of fish altogether.
With that said though, even stocks that turn out to be weaker are often carried along with the momentum when the market picks up. Also, I tend to double e.g. 2 gold miners, 2 Lithium miners etc etc.
I appreciate that you're not a big fan of mining firms and do realise that my decisions are more risky. Does any of what I've said make sense? I feel like a politician giving a really bad answer!!!
Sorry, been a bit under the weather so have not been at my computer much. And I am far from being a pro - just wondering what you look at. I might dabble in some mining shares in the future - so like to arm myself along the way. As miners are price takers - I probably would put emphasis on lowest cost operators. For normal stock I like to look at HEPs over a 5 and 10 years in combination with a stocks PE BTW - if you ever looking at a dual listed (with one side being in SA!) - great site for stats - and free. http://itradedata.co.za/Data/014590/fin_analysis.htm
Thanks Al and sorry to hear that you've been ill! You're right about looking for low cost operations (less susceptible to falls in commodity prices)
I recall you mentioning an interest in lithium miners. I think this is definitely something to buy stocks in (same with cobalt which goes hand in hand with lithium). I think that these will eventually become the 'new oil' stocks.
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The one weakness I have is penny share stocks (I'm kind of like a fly to sh*t). There's plenty of upside if you get it right but also lots of risk! That's why as per a previous blog I was wondering about miners in other markets (Canada & Aus) - From what I've seen they tend to be better quality and don't use shareholders as a constant cash cow.