Podcast #2 – Junior Mining Stock Speculation in Uncertain Times

https://www.youtube.com/watch?v=_-gWGhXYkh4

Today’s podcast is in response to the vast number of questions I have received asking about a coming market crash. Readers asked, how do you deal with the possibility of a future crash in the market?

For me personally, although I do believe that with each passing year since the 2008 crash, we are more likely to see another, I try not to change my approach to speculation, just the amount of cash I dedicate to it.

Why don’t I change my approach and speculate in something less risky?

First, the timing of these things is impossible to gauge, as the influx of cash by the central banks into our global monetary system has created a circumstance which is really hard to gauge, as we haven’t seen money printing on this scale before.

Second, from an investment perspective I don’t see a lot of value out there. The broader market is hitting all time highs each year, leading me to believe that a top is near.

Third, I accept the higher risk of speculating in junior mining companies as a trade off to the chance for higher than average gains. In times where political intervention has never been more pronounced, more and more people are speculators, even without knowing it!

A balanced approach to life and speculation is needed during these times of uncertainty. In my opinion a balanced approach to speculation means having a higher portion of your portfolio in cash or bullion. This allows you capitalize on a market when it does crash and in the same breath gives you the peace of mind knowing that you aren’t risking it all.

As the years have passed since the 2008 crash, the amount of cash I hold in my portfolio has steadily increased, but the way I speculate hasn’t. Personally, I strive to buy value in the market, which typically leads me into buying companies in sectors which are hated.

Along with buying value, when I finally find a company which I believe gives me a reasonable risk to reward ratio, I take a large enough position to ensure that I am paid for my patience and hard work.

Early on in my speculating career I took far too many small positions, which turned out to be great picks, but after hitting a 5 bagger, I was left with an amount of money that while being more than I started with, really didn’t make much of a difference in my overall wealth.

There are many different methods for being successful in the junior resource sector, but one thing that I think is important no matter what, is discipline. Having the discipline to stick to a method that works for you is integral for success in any market.

Disclaimer: This is not investment advice or a recommendation. I’m not an investment professional, nor do I know you and your specific investment criteria. Please do your own due diligence.