Thursday, February 27, 2014

One Hundred and Eighteen Percent In Less Than 2 Weeks

" Western Lithium is pursuing the opportunity to be a supplier of specialty drilling additive, HECTATONE™ and potentially other organoclays for the oil and gas industry, and in particular, to support the growth of high pressure high temperature, deep directional drilling applications. The Company is also developing its Kings Valley, Nevada lithium deposit into a strategic, scalable and reliable source of high quality lithium carbonate. The Company is positioning itself as a major U.S.-based supplier to support the rising global demand for lithium carbonate that is expected from the increased use of hybrid/plug-in and electric vehicles."
Western Lithium (WLC.TO) was highlighted in my blog on 14.2.14. The stock had shot up 118% in less than 2 weeks!!! I had bought 30,000 shares at C$0.33 per share. When trading closed early this morning at the TSE, the share closed at C$0.72. Let the good time continue. 

Sunday, February 23, 2014

MNRB Highest In The Last 15 Years

The above chart shows that MNRB has been trending up.In the last few trading days, the trend has become more apparent. At RM4.15, the stock is at its highest in the last 15 years. It is now in uncharted territory.

Going by the chart, the stock is poised to go higher. Attractive but dangerous as well. If you can't stand the heat, don't go near the fire.

Friday, February 21, 2014

The Five Biggest Stock Market Myths

When fiascos like the Libor scandal, London Whale scandal, and analysts' conflict of interest occur, investor confidence can be at an all-time low. Many investors wonder whether or not investing in stocks is worth all the hassle. At the same time, however, it's important to keep a realistic view of the stock market. Regardless of the real problems, common myths about the stock market often arise. Here are five of those myths.

1. Investing in Stocks Is Just Like Gambling.
This reasoning causes many people to shy away from the stock market. To understand why investing in stocks is inherently different from gambling, we need to review what it means to buy stocks. A share of common stock is ownership in a company. It entitles the holder to a claim on assets as well as a fraction of the profits that the company generates. Too often, investors think of shares as simply a trading vehicle, and they forget that stock represents the ownership of a company.

In the stock market, investors are constantly trying to assess the profit that will be left over for shareholders. This is why stock prices fluctuate. The outlook for business conditions is always changing, and so are the future earnings of a company.

Assessing the value of a company isn't an easy practice. There are so many variables involved that the short-term price movements appear to be random (academics call this the Random Walk Theory); however, over the long term, a company is supposed to worth the present value of the profits it will make. In the short term, a company can survive without profits because of the expectations of future earnings, but no company can fool investors forever - eventually a company's stock price can be expected to show the true value of the firm.

Gambling, on the contrary, is a zero-sum game. It merely takes money from a loser and gives it to a winner. No value is ever created. By investing, we increase the overall wealth of an economy. As companies compete, they increase productivity and develop products that can make our lives better. Don't confuse investing and creating wealth with gambling's zero-sum game.

2. The Stock Market Is an Exclusive Club For Brokers and Rich People.
Many market advisors claim to be able to call the markets' every turn. The fact is that almost every study done on this topic has proven that these claims are false. Most market prognosticators are notoriously inaccurate; furthermore, the advent of the internet has made the market much more open to the public than ever before. All the data and research tools previously available only to brokerages are now there for individuals to use.

3. Fallen Angels Will Go Back up, Eventually.
Whatever the reason for this myth's appeal, nothing is more destructive to amateur investors than thinking that a stock trading near a 52-week low is a good buy. Think of this in terms of the old Wall Street adage, "Those who try to catch a falling knife only get hurt."
Suppose you are looking at two stocks:

  • X made an all-time high last year around $50 but has since fallen to $10 per share.
  • Y is a smaller company but has recently gone from $5 to $10 per share.
Which stock would you buy? Believe it or not, all things being equal, a majority of investors choose the stock that has fallen from $50 because they believe that it will eventually make it back up to those levels again. Thinking this way is a cardinal sin in investing! Price is only one part of the investing equation (which is different from trading, which usestechnical analysis). The goal is to buy good companies at a reasonable price. Buying companies solely because their market price has fallen will get you nowhere. Make sure you don't confuse this practice with value investing, which is buying high-quality companies that are undervalued by the market.

4. Stocks That Go up Must Come Down.
The laws of physics do not apply in the stock market. There's no gravitational force to pull stocks back to even. Over 20 years ago, Berkshire Hathaway's stock price went from $7,455 to $17,250 per share in a little more than five year. Had you thought that this stock was going to return to its lower initial position, you would have missed out on the subsequent rise to $170,000 per share over the years.

We're not trying to tell you that stocks never undergo a correction. The point is that the stock price is a reflection of the company. If you find a great firm run by excellent managers, there is no reason the stock won't keep on going up.

5. A Little Knowledge Is Better Than None
Knowing something is generally better than nothing, but it is crucial in the stock market that individual investors have a clear understanding of what they are doing with their money. Investors who really do their homework are the ones that succeed.

Don't fret, if you don't have the time to fully understand what to do with your money, thenhaving an advisor is not a bad thing. The cost of investing in something that you do not fully understand far outweighs the cost of using an investment advisor.

The Bottom Line
Forgive us for ending with more investing clichés, but there's another old adage worth repeating: "What's obvious is obviously wrong." This means that knowing a little bit will only have you following the crowd like a lemming. Like anything worth anything, successfulinvesting takes hard work and effort. Think of a partially informed investor as a partially informed surgeon; the mistakes could be severely injurious to your financial health.


Monday, February 17, 2014

Silver Wheaton Corp Best Of The Pick

Over the last 12 months, silver has dropped from a high of $30.45 to a low of $18.50. This is a drop of 39% which is considered severe. Lately, the price of silver has picked up in tandem with the rising price of gold. Presently gold is at $1318.70 and silver is at $21.40. This means that gold price is 61.62 times higher than that of silver. 

In August 2011, gold reached a high of $1,889.60 and silver was at $50. Thus at that time gold was 37.79 times higher than silver. Many people thought at that time the ratio of 37.79 between gold and silver was too wide and would surely narrow. Obviously, they were wrong. What about now? Will the price of gold and the price of silver drifted more apart.  

Gold experts say that the logical ratio is 16. But the market, more often than not, does not follow logic. Therefore, there is no certainty of what's going to happen next. At best we can only guess. With a chart, this is made easier and more intelligent  than just mere guessing.

The above chart SLW shows that the stock has formed a round bottom. It is now poised for a good run-up. With silver price improving, silver mining companies are the ones that will benefit most.

In Bursa Malaysia, there is not even a single silver stock.  So, if you want to invest in silver, what are the options available to you. You can buy physical silver, open a silver account, or buy silver stocks overseas.

Among the many silver stocks that are listed in the NYSE, I like Silver Wheaton Corporation (SLW) which is the largest silver streaming company in the world. 

A silver streaming company is one that makes payment upfront to mining companies for the right to purchase all or some of the silver produced in the mines at a very low price. Lately SLW has also ventured into gold streaming. I feel this counter has the potential to move up fast. I like the business model of the stock.

There are many articles about SLW at Seeking Alpha. Please do your own research before buying the stock. The last traded price was U$25.38 per share. This is a good entry point, in my opinion.

You buy at your own risk.

Friday, February 14, 2014

Western Lithium A Potential 10-bagger

Western Lithium (WLC.TO) is a potential 10-bagger. This means it has the potential to move up 1000% in the next 5 to 10 years. 

The above chart shows that the stock has completed a round bottom. It is now poised to go higher. In the last trading session, the stock jumped 9.52% It closed at C$0.345 in the Toronto Stock Exchange. 

The company is in the business of producing Organoclay and Lithium. Organoclay is an important drilling additive in the oil and gas industry. Lithium is for the purpose of producing lithium-ion batteries. 

The importance of the oil and gas sector needs no introduction. As for electric vehicles, they are becoming increasingly popular as more and more countries are concerned about environmental protection and the need to lessen carbon dioxide.

If you are a high-risk-high-reward investor, and wish to be adventurous, WLC is definitely a stock you should look into. I bought 30,000 shares a day ago at C$0.33 per share.

For a comprehensive understanding of the stock, click here. 

The stock is also listed in America in the OTC counter. 

As usual, you buy at your own risk.