Margin of Safety
Let reality be reality. Let things flow naturally forward in whatever way they like. - Lao Tzu
Shi actually requires li in the opposition in order to be effective; it is the hungriness and immediacy of the latter that provides the edge to the former.. -
Life is a School of Probability. - Walter Bagehot
The true secret of happiness lies in taking a genuine interest in all the details of daily life. - William Morris
The most beneficial time to be investing is when the market is failing [Seth Klarman].
Value Investing is Not Easy.
Emotions are The Death of Wealth.
Optimum strategy is to attempt to be counter intuitive not seeking the short term market advice [Confirmation Bias].
Embrace Volatility > Much Easier to do with Experience and Knowing Valuation Metrics.
People in any Endeavor are #1 > Possibly more important than any metric. Good people can do much from little. Go to Japan.
Short sellers due a great job identifying frauds [“better than agencies at banquets” -R.R.] yet retain the probability of a max of 99% with unlimited risks.
- We are not interested in these odds… especially in a highly inflationary cycle [please read ‘The Economics of Inflation’]
Disciplined bargain hunters using a ‘Margin of Safety’ analysis retain risks of losing 100% but have unlimited potential gains in the other direction.
Warren Buffett is widely considered to be one of the greatest investors of all time, but if you were to ask him who he thinks is the greatest investor, he probably would mention one man: his former teacher, Benjamin Graham.
Margin of Safety is the principle of buying a security at a significant discount to its intrinsic value, which is thought to not only provide high-return opportunities but also to minimize the downside risk of an investment.
In simple terms, Graham's goal was to buy assets worth $1 for 50 cents. - Investopedia.c0m
Security Analysis is primary to the individual selection. Experience & Cycles Analysis also shows it’s ideal to consider the Macro Environment.
Examples:
- Sir John Templeton moved into aggressive U.S. Stocks post WWII in the 1940’s when most were Hard Asset Focused.
- Jim Rogers found Refuge in Commodities as most ran with The Nifty 50 into the massive Stock Market Run into the 1960’s.
- Peter Lynch saw value everywhere in common stocks [financial securities - corporate fixed income] in the late 1970’s to mid 1980’s when Financial Advisory model didn’t exist.
Screen Watching the management of what many consider ‘Assets’ RULES 2Day.
The TRUE gift of going back to The Gladiator Academy was Bottom Up Valuation & Gratitude. Peace of Mind.
Morgan Stanley estimated the average western financial / USA Inc account retained near 8% of gold & precious metals related equities in the 1980 peak [beginning of the bull market in promises to pay > Bond prices].
Despite a recent all time high in gold ETF withdrawals have been rampant with less than 1/2 of 1% of assets in gold & precious metals related equities.
Resource Speculation seeks a multiple on your capital without Using Financial Leverage from Margin [debt].
Ironically in such an inflationary environment hard assets / commodities act as a sanctuary for prudent capital.
MENTAL HEALTH CHECK >>> We see this fall as a continuation of a generational opportunity. Why? Pure Data.
Emotions are the Death of Wealth. Recency Bias is a Powerful Drug Fostered by Tactical thinkers.
You can't change the wind, but you can adjust the sails… - Investing Axiom
- CAS
Case In Point #1 Holding > Goldmining Inc. > GLDG [formerly Brazil Resources]
Imagine you could own an insurance policy, value & potential upside optionality?
1. Stock Trading at Negative Enterprise Value [EV] in 2023 > Cash and Securities held by USGO & GROY exceeded the aggregate Market Capitalization of this company.
2. Market Providing Free optionality of over 20M + in Gold Equivalent Ounces.
3. Intellectual Capital > $280M of drilling data by Amalgamation Companies would today require vastly more CAPEX. Data once considered gold is priced at Scrap.
Seasons Change.
“You are either a contrarian or you will become a victim.” - Rick Rule
“Junior mining stocks are call options on resource markets, and the duration [time decay] of those options can be greatly extended by good management & execution.” - David Lotan
*The fall of 2023 presented another amazing part of the 7 Year cycle. 2+0+2+3 =7.
Comments
Post a Comment