Financial Products & Your Investing Persona

*Disclaimer: The opinions expressed in this post are based on my experiences and should not be taken as financial/investing advice.

Like investing in junior companies, brokers and the people who write newsletters will play a large role in the value you take away, or in other words, how successful you are in the markets. Go for the best in the business, it’s well worth the money, but it isn’t as easy as picking a product with a great reputation, you’ve got to pick the product that’s best for you.

Over the years, my investing approach has gone through many permutations but I’ve finally found the one that works the best for me. My aim for this post is to share some ideas for how you, too, can discover the financial products that are right for you, without wasting as much time and money as I did.

Narrowing Your Search

There are a few questions you should ask yourself to help narrow the list of options for financial products:

1. Am I going to rely on the broker or newsletter writer to choose and track my investments, or am I going to do this myself?

Brokerages and newsletter writers have a lot of people and information at their disposal, which is put to good use when they choose and track their stock picks. In many of his speeches, Rick Rule has said, “you must be willing to put in an hour per company, per week, at a minimum, to properly pick and track a company.” Most junior company portfolios consist of at least 10 stocks, which translates to 10 hours a week. Do you have that kind of time? In the beginning, I thought I could do this. I tried, but working full time and taking this on in my spare time while my young children ran around me wasn’t practical, nor was it consistently effective.

2. Is the broker or newsletter author’s outlook on investing or speculating similar to mine?

I had a bad experience with this one, and it was entirely my fault. In mid 2013, I decided to hire a broker to manage some of my investments, for a number of reasons that I will cover later on. I’d been around the resource space long enough to be familiar with a lot of the players in the resource brokerage business, and chose the firm with which I wanted to work. After completing all of the paperwork, I was set up with a broker whom I met to review how my money would be invested. After this meeting, I left feeling completely deflated; the broker had a totally different outlook on the market than I did, not only from a macro outlook, but also from a junior company perspective. He didn’t want anything to do with the juniors and I had specifically chosen that brokerage because I wanted to invest in the junior market. I bit my tongue and let him invest my money as he saw fit. The consequence was that I was never happy with the outcome. Finally, in the summer of 2014, I asked to work with someone else, and from that first phone call with the new broker, I couldn’t have been happier. Our risk outlooks were very similar; he loves the juniors and is, in my opinion, very adept at picking stocks. I should have made the change earlier!

3.What is my risk appetite? Am I okay with potentially losing it all?

Your risk appetite is something that you really need to define, because speculation in the junior market is risky business and shouldn’t be taken lightly. Mistakes will cost you.

4. How much money do you have to invest?

Many experts suggest holding a portfolio of several junior companies to combat the risk of putting all of your eggs in one basket. Considering the risk level and the odds of success, when you get a winner you really want to make it count. Give this some thought. Is buying $100 worth of a junior, hitting a 10-bagger and selling the position for $1000 really worth it? The cheaper letters typically cover the larger CAP companies, which make them a better choice for those with smaller cash positions, as you don’t necessarily need to spread your risk as much as with the juniors.

5. How much do I want to spend on the product?

This question is tied in with the size of your portfolio; if I have $5000 to invest and the newsletter I’m considering costs $1000, I’m 20% in the hole before I even start. For the top newsletters, maybe this isn’t a problem, as they give you the best chance to succeed. But, I’m still not convinced this is the best product for you to buy. I would be looking in the $100 to $200 range, supplemented with library late fees!

6. How many others are getting the same advice?

Typically, the more money that you spend on advice, the smaller the audience is for that advice. This is a huge advantage as you aren’t competing with as many speculators for the same stock, when buying or selling. A lot of companies that have multiple tiers in their products will piggy-back stock picks, meaning the highest payers get in first and then each level gets their chance accordingly. This is a situation where being on the right side of a promotion can really help.

Product Example

Casey Research is a great example for these questions as they have a line of products at different price points and risk levels. For instance, for the entry level speculator, they have Casey Resource Investor which covers large MCAP resource companies that have much lower risk levels than the juniors and the newsletter cost is only around $100.

Their mid-level newsletter is the International Speculator, which covers junior resource companies. The risk level is significantly higher and so is the cost, coming in at $2000. However, the upside potential of the returns is much higher.

Finally, they have their ALERT service, which doesn’t have a set issue schedule and is released as the editor, Louis James, finds great opportunities – all be it, very risky ones. His picks can range from micro CAP explorers to large MCAP companies. Last time I checked, the ALERT service topped out at $5000, which is definitely on the high side for newsletters, or at least the newsletters with which I’m familiar.

Things to consider: If I’m going to spend $5000 on a newsletter, I better have a large enough cash position to make it worth my while to spend that much for advice. On the other hand, you are buying the newsletter company’s best ideas and sharing them with a much smaller audience. My experience is that you usually get what you pay for. In this specific instance, I’m not saying that Casey’s letters are good or bad, they just illustrate the point I’m trying to make. There’s a lot of choice, pick what is going to work for you and know what to expect from the money that you spend.

Remember, be very selective in who you let into your circle of influence, pick the best people and products for you. You may not find the right formula without some less than ideal learning experiences along the way, and that’s fine, just persevere and figure out what works – you don’t want to miss the bull market!

If you have any experiences or formulas for successful speculation in the junior resource sector that you would like to share, please let me know, and I’ll feature it in a post. You can reach me via the contact us form or send me an email at juniorstockreview@gmail.com. Also, I can be found on CEO.ca with the handle @Leni.

Until next time,

Brian