Hi Everyone,
Happy new year. What a year 2021 was. I could write a million things I am grateful for this year, and I hope you can also find as many for yourselves! My family and I moved to Dublin on January first in 2021, for a new adventure with my employer. New role and new country. I have to hand it to my wife; since I left Canada in December 2016, I have changed companies, positions, and cities where we lived, and she has always been my greatest supporter. We welcomed my second son this year. We bought our first home, still in the closing process as we speak but confident we will get it done in the next few weeks, and that feels big. We invited my wife’s family and my family over for the summer, which filled our hearts with countless happy memories. We finished the year in Portugal, where we stayed around Almancil for 35 days with the kids, and that was the best way to end an incredible year! We mark the 1-year existence of this growing community of the road out of serfdom. The one review of the blog is a tale of learnings, failures, and successes, which I want to focus on in this blog post.
Know thyself
The biggest lesson I have learned this year in investing and is also valid for life, in general, is that you need to know yourself first. What do I mean by that? I invest with a time horizon of 5-10 years in the future with the Road Out Of Serfdom. Even if I write that, I have understood how I react when the stock market dives 10% or 50%. It takes a mental and even physical toll at times. I try always to remember how it felt to look at my positions in late March 2020. I also remember how torn and almost sick to my stomach I was to buy back bitcoin at 4500$ USD. Many investors try to find investment ideas that can yield them ten times their money but to generate these kinds of returns, you will experience pain, regret, doubt, and you need to know how you will react in the face of adversity. What if, instead of holding my bitcoins and adding to my investments, I had sold at that price. I would have recorded a 35% loss and missed an incredible ride after that.
Due Diligence
An expression is overused and abundant on Reddit under the acronym DD. I often tell my friends that if you wonder why x stock went down, I bought more as a joke. The second-order principle from knowing thyself is that you will need to form a thesis to build conviction. That thesis is anchored in learning as much as possible about a sector, a company, an idea, whatever it might be. Reading financial statements is a must, and an industry publication or ask the investor relation group of company xzy questions that you might have. I prefer to stick to first-hand sources to form my opinion, and then I will add to research from other analysts. If you read this and think that sounds like a lot of work, it is, but it will give you the courage to hold on to your position when you should not sell them. So going back to the opening thought, if a stock goes down right after I buy it, having done a lot of research on it, I will not feel as bad seeing it decrease in value.
Failures
Looking back at the year in review, we started 2021 thinking that Silver and gold would keep going up in price and that the gold and silver equities we owned were going much higher.
But that did not happen. So what is there to learn here? The first lesson has to be mean reversion. Something that has gone way up in price, outperforming other sectors for some time, will be subject to return to its mean as people take profits along the way. Said another way, nothing goes up in a straight line forever.
The second failure was not averaging in my position enough. At many points during the year, I thought that the price of an equity was relatively cheap. Imagine I would want to hold 10,000 shares of the said company. I would break my own rule of buying in 3 or 4 tranches. After all, I tough the price was too reasonable and ended up missing out on much lower entry points along the way because I opened a position with 8,000 shares or even 10,000 shares at once.
My losing positions
Defiance Silver. I bought around 10k shares in early January. I liked the project, the management team, and the prospect of a higher silver price. This is probably the best example of buying something at the wrong time. Do I still like this company? Yes, not as much as it became clear that their copper/gold project will not be advanced. Instead, they will receive refreshed PEA, which is not needed in my opinion, and should instead move to Feasibility Study to account for inflation. I Lost about 1000 euros in this one and was down close to 20% on that position. Coeur de mining calls. Same story here, I was hoping the price of Silver would keep its winning streak, and I lost all of the call value, which was roughly 1000 euros. I lost my protective calls on the TLT and TZA, another 100% lost on those positions, but they were meant to be protective against a market correction. I was right on the idea but wrong on the timeframe, which makes me think I should rethink this strategy to allow for a longer timeframe. Those positions cost me close to 250 euros. Three valley copper and GTI resources. I lost roughly 500 euros on these stocks for a -30% and -60% ROI. I am still bullish on copper, but there was always the risk that the TVC, having a very high debt burden, could be diluted, which sure did, which tanked the stock. Am I still bullish on that stock? Absolutely not. The management has proven very ineffective. On GTI resource, a uranium explorer, I was betting on good drill results that never materialized. In total, I probably lost roughly 3500-4500 euros on bad trades, but there was a lot to learn.
My winning positions
Western Uranium. In a word, I got lucky. I bought for 10k Canadian this uranium developer in a private placement for 0.8$ CAD and sold everything at 3.41$ for a healthy 346% and +20k return. Then, the sweet kicker of the warrants that I exercised at 1.20$ and sold them at 2.27$ for an additional 89% profit and an additional +12k profit. Anfield Uranium! +70% and a 7k profit on this uranium developer. I still have the warrants available to exercise later in 2022-2023. Vimy resources and Alligator resources! +100% and a decent +6k profit. Next is Laramie resource, Elevate uranium, lotus, paladin, boss, European lithium, CKa, Ikweizi mining, Athabasca oil, and URA call spread. These were all liquidated to raise cash for my house purchase in November and ranged from10% to 95% return and a net profit of 10k. The great learning is that my winning trades far have made more profit than my losing positions as I write this.
The current portfolio
In 2021, we returned 76% compared to almost 27% return for the sp&500. I am pretty happy with this return and feel great about the positions I have opened in the year 2022.
Areas we are exploring for 2022
What do I like:
Uranium; needless to say, this trend is here to stay and accelerate
Energy: Oil, gas coal; same as above
Energy transition: Battery metals such as copper and nickel, and lithium
Energy crisis second-order effect: as natural gas hits all-time highs and manufacturing plants are forced to shut down; the fertilizer price goes up. As prices strengthen for energy, some reinvestments will be needed to sustain activities in oil and gas. We like as an early move exposure to the oil and gas service industry.
Cannabis stocks: yes, I can’t believe I am writing this, but some of the big names have been beaten up by as much as 80% from their high 2-3 year ago. We see value as a longer-term play.
Russia: Yes, Russia did very well and should continue to do well as their ties to China are strengthening, and they keep supplying raw materials to their growing economy.
Crypto (Bitcoin, Ethereum, ADA, Solana) I believe we keep seeing this increasing adoption trend, especially as countries experience very high inflation rates.
A big thank you
We started this experiment a year ago, and this community has grown to already +500 subscribers! Entirely unexpected but a welcome surprise! What do you want to hear more of in the new year? What has worked well in 2021 that I should keep doing? What should I move away from in 2022? This blog is as much about my passion for dissecting finance and investments as it is about you getting something useful out of it!
Let me know!
I wish you all the best in 2022, whether that is health, freedom, love, wealth that you desire! May all of it come true.
Cheers,
Max
Great update and congrats on such a great year! One question I have is how were you able to get notified of the warrants you purchased? I am not (yet) an accredited investor, but I'm not sure that matters and would like to get notifications of upcoming warrant/private placement opportunities (in Ur equities in particular).
500 subscribers! Nice! I hope my portfolio grows as quickly as your newsletter! I like that you talked about your L's too, not just your wins. Happy new year to you and the fam!