Are you in the top 1%? Are you the smartest person in the room? The answer is likely yes, if you subscribe to this blog.
The snapshot below shows that through now, this blog has enjoyed 4,615 visitors, but only 41 of them have chosen to follow this blog:
In other words, you have to be a certifiable sideshow to continue reading past this sentence . . . PERVERT!
But before you apply for a job at a circus, consider this: “99% of individual traders are lagging the index benchmark” for stock markets:
Can you beat the markets by hiring help? The odds are against it because, as you can see above, 90% of mutual funds lag the markets.
So if you are among the 99% who cannot keep up with the markets through active trading, index funds are the way to go. If you dare believe that you are among the 1% of weirdos who can beat the markets, consider these points:
I considered the above points back in 2006 when I stopped paying for investment advice, and put all my assets into index funds. I was looking forward to decades of working, saving, and happily accumulating capital no faster than the markets appreciated. But my mind wandered . . .
Am I really nothing more than a head of cattle? Is my best path through life with the human herd? Dare I depart? The odds opposed me, but I noticed things.
Follow this blog for future posts on how I dared go my own way, beat the odds, and outperformed the markets by a lot.
I used to use stock screeners like the one at Google Finance to find stocks with low debt and share prices low relative to book value.
Whenever I found a stock trading on a United States exchange that looked promising, I then checked Insider Cow to see share ownership by insiders. I then checked the Securities and Exchange Commission for quarterly reports (Form 10-Q), annual reports (Form 10-K), and the compensation that insiders paid themselves (Form DEF 14A).
I now like Canadian stocks a lot, so I use Canadian Insider to find which stocks have recently enjoyed purchases by their insiders.
If I see a Canadian stock that looks promising, I enter the symbol into Google Finance and look at the company balance sheet. If I see zero debt and a market capitalization low relative to book value, then I visit the company’s web site to get details on the company’s assets. I also visit SEDI to see what percent of the company insiders own. I lastly visit SEDAR to review financial statements, Management Discussions and Analyses, and the Management Information Circular for the compensation that insiders pay themselves.
All good things must come to an end, and my affair with Northern Freegold is no exception. I post now to mark the sale of the last of my Northern Freegold shares.
I mentioned Northern Freegold on August 21, 2015 when it was selling for C$0.06.
Northern Freegold has since changed its name to “Triumph Gold” and sells today for C$0.45:
This 650% price rise in under two years is off the charts even for me, but is not the outlier cherry picked selectively from a blindly random felling of a field of weeds.
Put less poetically, I DIDN’T MENTION IN THIS BLOG A MILLION STOCKS THEN POINT OUT THE ONE THAT ACTUALLY DID WELL.
In this blog, I have mentioned only three stocks: McEwen Mining, Manitou Gold, and Northern Freegold. All three have done well. Now that Northern Freegold has gotten pricey enough for me to sell it, maybe you better pay more attention to McEwen Mining and Manitou Gold:
CNBC in 2015 reported “how a janitor amassed an $8M fortune . . .”
His name was “Ronald Read, a Vermont gas station attendant and janitor, invested in recognizable names when he amassed an $8 million fortune . . .”
CNBC went on to explain that “to reach Read’s $8 million fortune, . . . investors would have to invest about $300 a month at an 8 percent interest rate over 65 years. ”
All this shows that Robert Read was very smart and systematic with money, especially for a janitor. He was also lucky enough to live to the age of 92 and watch his investments grow for 65 years.
But could Robert Read have done better?
As followers of this blog know, a certain trash dump worker achieved 25.56% yearly returns in the ten years through 2016. Since 2016, his investments have stagnated and his yearly returns have gone down to only 21.4% in the eleven years through 2017.
How well could Robert Read have done had he followed this blog? This spreadsheet does confirm that $300 per month saved over 65 years and compounding at 8.39% per year would have resulted in a balance of $8,026,461.20. But if Robert Read had been as wise as the trash dump worker, his $300 per month saved over 65 years and compounding at 21.4% per year would have resulted in a balance of $5 billion.
My point is that the yearly return you get on your investments matters a lot. Robert Read “invested in recognizable names” that paid dividends. I think investing in recognizable names was Read’s biggest mistake. Names that people recognize are the first names that people buy and bid up in price, so recognized names are impossible to buy cheaply. In order to get the highest returns, investors need to buy UNRECOGNIZED names with zero debt, high inside ownership, and market capitalizations low relative to tangible net asset value. Appreciation in the share prices comes IN THE PROCESS of the market recognizing the name.
And buying into companies that pay dividends is not such a bad idea, but it is if the company gets the money for dividends not from operating profit, but from borrowing.
From ZeroHedge: “Harvard’s returns have trailed rivals’ in recent years – the endowment’s annualized gains of 5.7% over the 10 years ended June 30, 2016 are second- lowest in the Ivy League and below the comparable 8.1% returns of Yale University and Columbia University, . . .”
The elite schools of the USA have achieved annual gains of at most 8.1% in the ten years through 2016. I wonder why they don’t hire this guy who achieved annualized gains of 25.56% in the ten years through 2016 :
Not bad for a trash dump worker:
I introduced Manitou Gold on February 19, 2015 as a joint venture between Goldcorp and Rob McEwen. Manitou Gold shares then were available for only two cents each:
Manitou Gold yesterday (June 3, 2016) went up 90% to 9.5 cents per share in just one day:
Manitou Gold has risen 375% from 2.0 cents to 9.5 cents since I introduced it sixteen months ago on February 19, 2015.
Could yesterday’s 90% rise in share price be the first shot in a bidding war between Goldcorp and Rob McEwen for Manitou Gold?
From the name of this blog, perhaps you have ascertained that I believe measuring ROI by a finite resource like gold is better than measuring ROI by the perpetually proliferating U.S. dollar.
In other words, because the U.S. dollar perpetually proliferates, the gold price will perpetually reach record highs despite pullbacks that sometimes last years or even decades.
If you have reviewed the basics of our fractional reserve banking system, then you understand that anyone who borrows a single dollar ultimately spews multiple dollars into the cesspool of dollars through which we slosh and struggle our centrally planned economic lives.
Simply put: more debt means more dollars, and more dollars means more maniacally high gold prices someday.
So with great alarm (and some glee), I spectate the American sport of borrowing dollars. And nobody borrows more dollars than the U.S. government.
Headlines frequently appear in the news that announce the magnitude of the U.S. government budget deficit and debt. But I am a bit baffled that recent figures regarding November, 2015 have hit neither any mainstream media nor any alternative media.
The U.S. national debt rose by $674 billion in just November, 2015:
Even if we exclude the $339 billion of debt incurred on November 2, 2015 to cover Jack Lew’s “extaordinary measures” of the previous eight months, the U.S. government incurred $335 billion of debt in November, 2015 alone.
I can only guess why finances of the U.S. government deteriorated so badly this past month. Did it lose capital gains tax revenue over the past six months as the S&P 500 failed to beat its record high from May, 2015? Did Obama ramp up military maneuvers in the Middle East?
Anyway, like everyone else who appreciates the ability of gold to retain value over multiple millenia, I keep hoping the gold price has finally bottommed out. The recent U.S. government diahrreal bout of dollar debt cheers me.
So on a cheerful note, I would like to show that the gold price can snap back and rise very quickly. It rose more than 50% in just ten weeks in 1982:
Northern Freegold (symbol NFR, NFRGF for Americans) is a Canadian company. Its main asset is the Freegold Mountain Project in the Yukon territory (click to enlarge):
At a gold price of C$1,484.69; the after-tax Net Present Value of its main asset is C$357.8 million:
The gold price in Canadian dollars right now is C$1,509.27:
Northern Freegold is now on sale at a market capitalization of only C$1.6 million:
Why would the market sell a C$357.8 million asset for C$1.6 million? Did the insiders screw up Northern Freegold? Probably not. Of the 45.768 million shares, all eight directors on a single day (January 30, 2015) bought into 19.3% of Northern Freegold.
Here is the share count of 45.768 million:
Here are the names of all eight directors:
The shares and warrants that all eight directors bought on a single day total 8,860,800, 19.3% of the 45.768 million shares fully diluted: