Infamous Canadian stock promoter Murray “The Pez” Pezim is said to be the source of the expression, “When the ducks quack, feed ‘em.”
My translation: “Tell investors what they want to hear.”
That’s not to say that The Pez wasn’t involved in some real discoveries that made fortunes for some investors. He was, and they did. But this very success gave him the credibility he needed to sell just about any exploration play—and we all know that not all exploration projects work out.
Aside from that, it’s precisely when the ducks are quacking that it’s most likely harmful to feed them.
My translation: It’s when markets are hot and overbought that it’s easiest to sell new investors on jumping in, but that’s precisely the time to be heading for the exits.
“Buy low, sell high.” That works.
“Buy high, and hope to heck to sell higher.” That’s asking for trouble. The only sure thing about it is that someone will eventually be left holding the hot potato.
This is why you aren’t seeing a barrage of daily headlines from me, touting the vast fortunes to be made almost overnight buying the one overlooked pot stock only I know about.
Or, closer to home, it’s why you don’t see me touting the market darlings in the resource sector, even though that’s what investors want to hear about.
The boldest statement I’ve made since launching The Independent Speculator is that uranium’s time has come. I didn’t promise insane gains overnight—or ever. I just said that I thought uranium is finally headed higher, and the right uranium stocks will add leverage to that rise. And I’ve been right on both counts.
My writing—which assumes intelligence rather than insults it—fits my personality. I like being able to look at myself in the mirror. I work hard every day, I get paid fairly for the value I provide, and I sleep well at night.
But my approach comes at a cost. I’m constantly told by my peers and almost everyone in marketing that I’m doing things wrong. I could sell so many more newsletters if I would just write highly emotional promotions under alarming headlines like, “The End of America.” (That’s a real example, by the way, which brought in tens of millions of dollars for a newsletter writer I know.)
More recently, a reader sent me a link to an interview with a well-known financial writer who went on the record saying that the financial apocalypse many gold investors have been expecting for years—or decades—is finally starting. “When is now,” he said on August 25, 2018.
It’s only been about a month, so perhaps I should give him more time before concluding that he is wrong. And in all fairness, I think this person will eventually be right; the piper will eventually have to be paid for all the economic insanity that led up to and ensued from the crash of 2008. But in his interview, he indicated that a major collapse would occur in the space of a week, so color me skeptical.
The point is that there’s a market for such dire predictions. Certain ducks were quacking, so he fed them. Last I checked, that interview had more than 200,000 views. And yet, even with the latest round of tariffs in the trade war, there’s still no collapse.
I might be more inclined to have patience with a fellow writer calling it like he sees it, but I remember the same author raising a huge stink a half-dozen years ago about naked short selling in the junior resource sector. The scary headlines were so alarming, I got messages from concerned readers for months afterward. And yet, short selling—naked or fully covered—didn’t wipe out the junior miners. (Even years of lower metals prices didn’t do that.)
I’m particularly sensitive to “the end is nigh” claims because I believed so many of them before and after 2008. And they were wrong. Many people, myself included—and to my enduring chagrin, many of my past readers as well—invested less effectively because we believed them. I do think the end will someday be nigh, but I don’t see it just around the corner. And when it comes to investment, being too early is the same as being wrong.
Crashes, collapses, and other financial calamities do happen… but they’re rare.
Scary headlines are as rare as grains of sand on a beach.
Remember: the more extraordinary the claim, the greater the burden of proof. The scarier the headline, the more skeptical we should be of it—especially if it proclaims something we want to believe.
Personally, I’d rather concentrate on getting things right than getting better at selling things that may or may not be right.
I believe there’s a market for rational analysis and respectful writing.
I have to admit that it’s clearly a smaller market than the one for scary hype and unrealistic promises. But that’s okay; I have this niche almost to myself, and it’s full of savvy speculators who know what they’re doing. And in time, my results will speak for themselves to anyone who is more interested in making money than consuming hype that appeals to their biases.
One more thing. Investment quacks hype whatever’s hot. That usually means that they promote what’s already overbought. Rational speculators buy what’s undervalued. Ideally, we buy valuable assets that are so unpopular, they’re selling stupid cheap.
This is the main reason I didn’t chase cryptos last year. It’s why I’m not chasing weed stocks now. It’s not that people can’t make money on these things; some people have made huge profits on them. Others got—and I predict that many more will get—burned on them.
I want to buy low… and it’s in the resource sector that I see stupid cheap prices on many things that are absolutely essential to billions of people around our world.
Truth or scare—which would you prefer?
