I agree re SMN, I also told everyone I know to buy SMN at 10c....

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ryan1986

2,167 Posts.

14/04/16

16:36

Post #: 17505321
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Originally posted by heraclitus ↑

All good, Ryan. You have to back yourself (and research) in and sometimes put it on the line.

It's all about what you consider investment grade vs speculative and how confident you are in what you hold, isn't it.

Take SMN, for example. I know the business extremely well and have made a large (paper) sum on it, but would still consider it speculative and not part of my core "investment" holdings (until proven otherwise with contracts, significant $ etc). Not under any illusions there, despite having a soft spot for the company (good gains tends to do that though)

tbh, playing the specs is much more exhilarating and enjoyable - especially when it's going your way, but we both know the spec returns will only last for so long, hence - for me - the continual ploughing of spec profits into better businesses that I have also researched as thoroughly as possible. Not saying EMC and HZR won't be around in 3 years and progressing their operations. Just that if markets turn sour, the speculative premium for pre/low-revenue stocks imo will fall sharply, as liquidity dries-up. We know this though from observing previous market cycles, so nothing new there. If markets keep holding-up, then your thesis on more gains to be had on those two probably has a good chance of playing out. We only need to look at lithium stocks to see what can happen to valuations of companies in the right sector even if half of them will never earn $1 of revenue.

Best of luck with it.

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I agree re SMN, I also told everyone I know to buy SMN at 10c. Still one of my favourite stocks on the ASX. I bet anyone who said SMN would be a few dollars in time back when it was 10c - 30c range would have been called crazy rampers, but those who stuck with high conviction saw very nice gains.

Alternatively you could buy what many call safe, eg BHP, back in 2008 and hold it for 8 years and have never once even broken even in those 8 years.
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