One day last week I loaded up Youtube and saw this video pop up as a possible one to watch. The title of it caught my eye so I clicked it.
The video shows you the incredible potential to make a fortune in the stock market. Really there is no other way to take a small stake and turn it into a massive one as the stock market.
But with the promise of the markets there is peril! And to really do it you have to get in at the right time in a sector that is truly cheap. This is why dope stocks no longer are working like they were in the past and neither is the “FANG” complex. And forget about crypto. You might as well throw your money down the toilet if you buy a virtual coin. Bitcoin is breaking down this morning down below $10,000 as I write this.
On September 3rd I did a simple blog post titled Now Is The Time To Sell Bitcoin And Walk Away From It Forever. The coming breakdown in Bitcoin was obvious and this week it is happening.
On Monday Bitcoin broke $10,000 and this morning it is falling below $8,500. The next collapse for crypto is now starting!
But let’s talk about making gains.
The video is about a man who turned $20,000 into $15 million by buying penny mining stocks in the early 1980’s. But he lost all of those gains during the 1987 stock market crash.
He came back in 2001 and 2002 and then made another massive score, but lost most of the gains during the 2008 crash. He held on to much of what he had left and made most of it back to only lose again as gold, silver, and the mining stocks entered a new bear market in 2012.
There are some key takeaways from this video.
1)First of all it is obvious that the guy needs to take some money off of the table at some point and not doing so has been a key problem for him.
But it’s easy for a viewer of this to think he has a problem or is some crazy gambler. But the reality is that the real underlying problem is that he is betting 100% on one single trend – and almost everyone who watches CNBC or has a US brokerage account is doing the exact same thing with the US stock market.
Someone who has 100% of their money in the US stock market – or anything – is setting themselves up for hell the next time there is a bear market as they are doing the same thing this guy describes in this video – buying and holding without ever having any plan on when to sell.
There is no way to be able to sell at an exact top of a stock or big market cycle over and over again. To remain 100% invested in something with all of your money in it also makes it is so that it becomes almost impossible to get out as when things go up people become scared that if they sell they will miss out on more gains. They get greedy and in fact will lash out at people who tell them to take money off the table.
They turn themselves into true believers and ride things down to oblivion. It is then that they begin to resemble the classic gambling addict. People still holding on to completely worthless “crypto coins” are now doing this to themselves.
If you can’t time perfectly when to get out what do you do?
The simple solution is to diversify into multiple asset classes and multiple sectors that don’t all move in synch together. There are things that tend to go up when something else goes down. Always be looking for new opportunities. You don’t have to go from being 100% invested in something to 100% cash. You can take some money off of the table and do some selling from time to time to put some resources into something with a better opportunity to it. I use a rebalancing system for money management that doesn’t require trying to time exact tops.
One implication is that the smart US stock investor will now take some money off of the table and to put it to use in the precious metals world.
2)What is actually more important than timing tops is timing the buys correctly!
This is actually a big key to this man’s success and if he is still holding on from the time that this video has been made he is doing very well right now.
This video was made in March of 2015 during what was the final bear market bottom in the mining stock world. Many small mining companies went bankrupt that year, but the stocks that survived in the small cap world made final bottoms from March to July of that year while gold made a final low in early 2016.
So this video was being made at a key turning point in the market. Here is a chart of the HUI gold stock index to show you how it has moved over the years.
In the video he says he bought into mining stocks again after the 1987 crash sometime in 2001-2002. I actually bought my first mining stock in the first quarter of 2002.
Right now the action in the small cap mining stock world is very similar to how things were lined up in 2002 for them. The valuations for them are cheap and almost all of the stocks are either positioned to breakout of stage one bases or are having their first pause after having broken out of a big base a few months ago.
That means that from a valuation and technical price perspective we are in a key window for this sector that is only going to last but so long to get in at these cheap levels and get these type of fast gains. These small cap mining stocks are moving like Internet stocks used to do in 1999. I believe this is happening because they are at such cheap levels. Perhaps this type of price action will last for more six months or for another year But this is the moment of a lifetime for those that want to get involved in this sector at the right time – it should be like buying the US stock market in 2009.
Check out my new video and get ready for a new small cap stock pick lining up that I posted yesterday by clicking here.