By Kyle Johnson
“Fresh fish! Fresh fish!”
That’s what the inmates of Shawshank State Prison chanted at new arrivals in the classic movie, The Shawshank Redemption. They taunted a bus full of new arrivals as they placed bets on which “fresh fish” would break down and cry during their first night in prison.
Feel free to judge.
The silver lining here is that experienced speculators and contrarian investors can profit from providing the education today’s fresh investment fish are about to receive.
A recent study of more than 100 million individual investors shows that use of self-directed investment accounts is on the rise. Between 2018 and 2022, the percent of investors using online brokerage accounts increased from:
- 22% to 35% for 30-year-olds.
- 23% to 36% for 45-year-olds.
- 19% to 32% for 60-year-olds.
Among 85-year-old investors, 20% of their money is invested with self-directed online discount brokerages.
Across all ages, the money held in self-directed accounts increased. They hold a greater percentage of their wealth in equities than before.
What has inspired these changes?
Perhaps investors have realized the financial industry is structured to generate fees for fiduciaries rather than returns for their clients. Maybe they’ve grown tired of investment advisors steering them head-on into disaster as they did during the dot-com crash and the 2008 global financial crisis.
I suspect many have heard one too many stories about average Joes striking it rich with meme stocks. Retirement statistics suggest that many investors need a big payday to retire worry-free.
When polled, Boomers say they need $1.1 million to retire comfortably. But their median retirement savings is just $120,000. Nearly half of Boomers have no retirement savings at all.
Younger generations aren’t faring much better.
64% of Gen Xers fear they won’t have of enough saved for retirement. 25% have no retirement savings. 35% have under $10,000 saved for retirement. 25% have between $10,000 and $50,000 saved.
34% of Millennials feel behind on retirement savings, and 19% believe they’ll never be able to retire.
This sets up nicely for speculators with a game plan.
A time will come when mining and resource stocks demand headlines and extensive coverage by mainstream outlets. Most people taking control of their investment decisions are generalist investors and momentum traders with little to no experience in mining stocks. They’ll predictably flock to the biggest names in the industry—major producers we call “go to” stocks.
But they’ll also make rookie mistakes.
They’ll buy scores of stocks, far more than they are capable of fully understanding and tracking. Or worse, they’ll go all in on some little-engine-that-could story, hoping to get lucky. They’ll buy stocks having no idea why they’ve suddenly taken off—like when shares of Aurion Resources shot up 20x on high-grade surface samples that have yet to lead to the discovery of an economic deposit. Or worse, when Hycroft Mining—the latest company to have a go at a mine that keeps bankrupting its owners—briefly turned into a meme stock.
Experienced resource investors know there are better strategies, such as what Lobo Tiggre, the independent speculator, calls Success In Progress and the pre-production sweet spot (PPSS).
When markets move fast, people panic. That can mean making terrible investment decisions based on the fear of missing out—or selling great companies for reasons that have nothing to do with their prospects.
Without discipline, feeling behind financially compounds poor decision making.
The education provided in Lobo’s free weekly Speculator’s Digest can help newcomers avoid such mistakes.
For those who’ve already been around the commodities block a few times, playing our cards right can help us profit as the fresh fish pour money into our sector. I don’t mean that we should promote garbage or dupe anyone. But some of the flood of money that pours in when gold, silver, uranium, copper, lithium, or even oil becomes a flavor-of-the-day mania will find its way into quality companies as well.
By locking in our gains and making profits repeatedly, rather than occasionally, we can show the fresh fish how it’s done—and why they shouldn’t give up after they’ve learned a few hard lessons.
It might sound cruel, but there’s no better education.
As Lobo says, caveat emptor.
KJ
