At the request of the Cara Community, I have laid out the process of how I invest and trade. I also produce verifiable records of my performance this week.
To begin a subject that is as long as it is wide, let me say that all my investing and trading depends on what my objective is, which varies as to whether I do it privately or in the public domain.
Starting with a general topic of interest, I list the possibilities, then sort the ones with superior fundamentals, then await macroeconomic factors that ought to influence the market prices, and finally use the technical tools of time and motion indicators to determine when to enter and exit trades.
The corporate fundamentals that are most important to me are balance sheet strength, GAAP earnings and earnings growth, cash flow and cash flow growth, and where earnings are in flux, I will look at EV/EBITDA. Obviously, these factors show that I am mostly interested in real things. I have never been good at understanding how to compare companies with a large intellectual property and goodwill component to their (promoted) stock prices.
Macro-economic factors like the actions of the Fed, interest rates, select economic data reports, commodity prices, political factors and changes to laws, and so forth, must be monitored and a decision made as to how much these drivers will likely impact market prices.
Technical analysis is a massive subject. I use technical indicators as part of my trading discipline but avoid what I call pattern systems like Elliott Wave and the like because capital market prices run fast and cold, which requires a tweaking of the many indicators of forward price motion. Market prices are like living and breathing systems that you need to follow the cadence of and get into sync with. However, individual stocks, industries and sectors of the market are known to fluctuate with different frequency and amplitude, so it makes no sense to me to apply rigid systems.
The indicators that I use are both trend and momentum oriented. They are the ones I write about — RSI, MACD, Stochastics, True Strength Index, Coppock, etc. I sometimes look at the reversals and reversal projections and sometimes the trendline breaks. The time measures I apply to each data series that I study depend on my interpretation of market volatility at the time, but are always done together in Weekly, Daily, 2-hour, and 30-minute studies, which is how I interpret the ‘breathing’ aspect. I always study peer groups because I know that large investors tend to invest across industries just as Wall Street analysts will do comparative studies to end with conclusions as to which instrument is superior or whatever. But mostly, the peer groups indicate a changing macro-economic factor or a market narrative that is being manufactured for some purpose.
I do all the above with a minimum of personal bias regardless of why I am doing it. There is a significant difference in what I do as a registered investment consultant for specific clients (where I have a fiduciary obligation to act in their interest above mine) and what I do as the Greenfield Capital billcara.com publisher for the public (where I try to educate, inform, mentor and generally try to improve society). But investing and trading is always the same.
Actual performance is the only arbiter of the quality of an investor-trader. TV talking heads, well-known professors, salespersons-promoters and financial analysts may educate, inform, entertain, and even dazzle their audience with their words, but they are almost certainly inferior investor-traders. Even competent and successful forex traders or bond traders or commodities traders are often inferior equities traders and vice versa. Although I have no proof, my experience tells me that venture capitalists, private equity experts, and investment bankers are typically bad traders of equity markets. Part of the reason is lack of time to build experience and hone skill. People are busy earning a living.
As an investor-trader, I try to have my work speak for itself. Often there are reasons why a successful trader falls into a period of bad trading. It could be a matter of distractions or something more serious of a personal nature. But at the end of the day, the person can produce profit from use of money in capital markets, or not, based on whether they know how to invest and trade.
By the way, too much is made of what is an investor and what is a trader. The investor is the person and the trader is simply one aspect of the person — like a fisherman or an athlete or a homemaker is a person. There are many types of investors. In my case, I am a portfolio investor. I create portfolios and trade positions.
Now for an example of my trading. A verifiable example of 100% of what took place this week. These are the actual trades I entered in a new publishing system that next week will be available to the public for those subscribers who may wish to pay for my publisher-exempt ideas and trades. This is not the trading I do professionally for clients where I act as a fiduciary.
What follows are Precious Metal trades only. Soon I plan to offer the trades I do of what I believe are the best ideas from the Cara Community, including me for non-Precious Metals trades. All these trades are what are referred to as being done using a Swing Trade style. I am also going to offer four ETF-based model portfolio ETF-based trades that are essentially buying and hold ones with occasional adjustment trades. The latter ought to be appealing to risk-averse investors who have a long-term time horizon objective. They will be: (a) Aggressive Growth (b) Moderate-Aggressive Value (c) Moderate-Conservative Value (d) Equity Income.
Publisher-exempt ideas and trades are offered to individuals who own self-managed accounts for investing or trading using their own objectives, needs, style, and so forth. Regulators have ruled that the publisher has no fiduciary responsibility to anybody in the public who might choose to follow some or all the ideas in some manner.
I am not an owner or operator of this particular trading service that is being readied for public use. The group contacted me two weeks ago to see if I liked the concept and might join as a publisher of trade ideas. I agreed to a test account on Friday, May 20, and started for real on Tuesday, May 26. The owner-operators are making engineering changes on the fly, some of which I have asked for. In my opinion, this service has great potential be a winner.
The verifiable record:
During the three days Tuesday-Thursday this week, in a Precious Metals equity account,
For my Greenfield Capital (which owns billcara.com), I submitted 1 complete trade at a realized gain of +7.06% and made 11 other trades that generated a +5.26% unrealized gain.
At week’s end, these trades were 83.3% profitable, but until later in the day Friday, I had been running 100% profitable. On Friday, I happen to have been busy with clients and with filing documents with the SEC. I only traded privately for clients on Friday.
Here are the time-stamped trades. Afterward, I will list the trading ideas (200 characters or less each) and the times I made the submissions to the system.
05/26/2020 2:03 pm
AGI entry $7.83 Last $8.10
Unrealized Gain (Loss) +3.45%
05/26/2020 3:46 pm
SVM entry $3.96 Last $4.42
Unrealized Gain (Loss) +11.62%
05/27/2020 12:24 pm
BTG entry $4.97 Last $5.48
Unrealized Gain (Loss) +10.26%
05/27/2020 12:25 pm
KGC entry $6.53 Last $6.55
Unrealized Gain (Loss) +0.31%
05/27/2020 12:25 pm
NUPMF entry $3.93 Last $4.21
Unrealized Gain (Loss) +7.12%
05/27/2020 12:41 pm
AEM entry $62.36 Last $64
Unrealized Gain (Loss) +2.63%
05/27/2020 12:57 pm
Create idea for MUX (EP = $0.80)
05/27/2020 2:01 pm
Adjustment submitted to brokerage: Entry Price to $0.82
05/27/2020 2:34 pm
Adjustment submitted to brokerage: Entry Price to $0.85
05/27/2020 2:45 pm
Order filled at average fill price of $0.85
05/28/2020 9:53 am
Order closed at market at average fill price of $0.91
Realized Gain +7.06%
05/27/2020 1:34 pm
GOLD entry $23.71 Last $24
Unrealized Gain (Loss) +1.22%
05/28/2020 9:30 am
WPM entry $43.10 Last $43
Unrealized Gain (Loss) -0.23%
05/28/2020 9:57 am
SSRM entry $19.51 Last $19.23
Unrealized Gain (Loss) -1.44%
05/28/2020 1:28 pm
FSM entry $4.20 Last $4.49
Unrealized Gain (Loss) +6.90%
05/28/2020 1:44 pm
PAAS entry $26.69 Last $29.30
Unrealized Gain (Loss) +9.78%
In order of the most recent ones, here are the trading ideas and times I submitted them to the system:
05/28/2020 9:21 am
Wheaton Precious Metals is the world’s premier precious metals streaming company with the highest-quality portfolio of long-life, low-cost assets from 20 operating mines and has 9 developing projects
05/28/2020 9:20 am
SSR Mining produces gold & silver (~425K geo) in Canada, Mexico & Argentina with a low AISC of $740/oz. Strong financials ($504M cash 12/31). Excellent EPS & Cash Flow growth
05/28/2020 9:19 am
Pan American Silver is world’s 2nd-largest primary silver miner with 10 mines in Peru (43%), Mexico (31%), Canada (15%), Bolivia &Argentina (11%). Owns~10% of New Pacific. Improving earnings outlook
05/28/2020 9:18 am
Fortuna Silver operates gold & silver mines in Peru & Mexico and has a mine under construction in Argentina. Good earnings & cash flow. Sound financial condition. Well managed
05/27/2020 1:33 pm
Barrick Gold Corp is one of the largest goldminers with 2020 production to be ~5 mil oz. Solid balance sheet. Q1 operating cash flow of US$889M and free cash flow of $438M from world-class mines
05/27/2020 12:57 pm
McEwen Mining is a jr gold & silver producer with an industry giant as unpaid CEO/promoter who holds 20+% of the stock. Co was plagued by bad luck recently and runs the risk of NYSE delisting
05/27/2020 12:40 pm
Agnico-Eagle Mines is a large gold producer with solid management, reserves, and financial condition. The Company has good revenue, cash flow, and improving earnings. Its mines are in low
05/27/2020 12:22 pm
Kinross Gold is in the large-cap group, with 2020 production likely to be ~ 2.2M OZ with an AISC of just under $1000/oz. Strong balance sheet. Not as well-liked by me as BTG, but part of my portfolio
05/27/2020 11:58 am
B2Gold is world-class. Q1 production was +25% Y/Y to 250K oz., while AISC dropped -6% to $695/oz, and cash flow from the 3 mines soared +151% to $216M. Q1 average gold price was $1,588/oz vs ~1700 now
05/27/2020 11:26 am
The Silver Sands project of New Pacific Metals has the potential to become one of the largest open-pit silver mines in the world. The ore body is proven. Now the people of Bolivia must want it.
05/26/2020 2:24 pm
Silvercorp operates polymetallic metals mines in China. Strong cash flow and earnings, lowest AISC of any silverminer, and strong cash position. Recently acquired Guyana Gold and controls New Pacific
05/26/2020 2:03 pm
Alamos Gold earned US$96.2 mil (US$0.25/sh.) in 2019. I think they could come in somewhere around US$140 million or US$0.31/sh. in 2020. With their average PE ranging 24-36x, I’m setting a US$9 target
Next week, I will write about the company that provides this service and about the service itself.
What impresses me the most is that this is the first service of its kind that I have seen that has the power to make laughable and perhaps put an end to the absolute nonsense in published recommendations and fraudulent stock promotions the public receives all day every day.
Time will tell.