@seaemay I've been having a think about a number of the posts on the forum lately that suggest that the SP is likely to recede, as well as those (like yours) that talk about trading the stock and selling high with the option (even intent) to buy lower. Based on this, I started to run some numbers today to have a look at what the implications would be if I decided to drop some shares and try and buy lower. I came up with some conclusions - some based on this and some that are more general:
1. Even if I sold a heap of shares at say 10c, and assuming the price fills the gap at 6.3c (a big and dangerous assumption), I would get a heap more shares but if I sell any of them in the next 12 months, the tax would be extra-ordinary to the point where it would hardly be worth the risk. It became apparent that I have no idea what the SP is going to do over the next 12 months, but for me to take the risk, the tax man is entirely the winner.
Observation point: Great advantage for the tax office, very little in real terms for me.
2. I had a look back at 2017-18 and the last time we had a significant rise. At this time the pump lasted about a month or so and then drifted back to where it was. I had a look at the fundamentals then and compared them to now. I was trying to draw conclusions as to why I would sell now, but honestly, after I considered the broader environment, the time then and the time now are completely different. Then we were going into a lithium down cycle and un-beknown to me it would put CXO in a rut for several years. Right now the market is coming out of the rut and with the lithium prices going up and the increase in M&A, this means that the attractiveness of the sector has changed. The potential of sales revenue for CXO has changed and the potential for finance has also changed.
Observation point: Now is NOT AT ALL like then and I think it is a mistake to assume it is.
3. I had a look at a bunch of other lithium explorers and their SPs and what happened after they had taken a decent leg up. Most of them only dipped back below their original price because of the COVID-19 sell off. If that had not happened, I feel like prices may have recovered earlier.
Observation point: This year has not been normal and analysis based on the last 12 months may be foolish.
4. There has been a few comments about the potential slow down of news over the next few months. To me, the last few months of news have focussed on gold and not lithium, this likely means that lithium news could come very soon. The exciting part is that this news could cover any amount of potential scenarios from resource increases, assay results, off-takes, finance or even a potential TO.
Observation point: Don't forget that lithium is the main game and it has enough punch of its own....then add gold and any day could redefine this company.
5. I went to the AGM last year to meet the board. I figured I had enough invested that I should figure out what kind of people they are. My visit uncovered no red flags, and I started to form the opinion that the relatively slow progress (my words and opinion) might have actually been based on my own misconceptions and not their inaction. A proper assessment of what the company has achieved over the last few years is actually exceptional.
Observation point: Look at results and base the assessment on what has actually happened and not what I thought should have happened - definitely compare this to what others have achieved in actual progress as opposed to just SP over the same time.
6. We have had some good SP appreciation lately, and while this is likely to recede a bit, I doubt that it is heading back to where it started. There is just too much happening within the industry at the moment and too much has changed. There are so many companies that need a quality product, a supply sector that is basically frozen, money that is almost free, and a very likely shift to 'higher risk' assets next year as a result of the QE by the RBA.....not to mention the worlds focus on the vaccine delivery.
Observation point: Markets might potentially look bad going forward, but there is definitely enough to keep investors interested for the next 6 months at least - who knows, maybe longer.
7. I honestly don't understand trading when a company has excellent prospects. I have never been great at timing the market, but I have learnt that a company with great prospects, well, it has great prospects. I can try and sell high and buy low, but honestly it is all too hard. When I look at CXO, all I see is an excellent future full of so many opportunities for future advancement. I could try and trade it, or I could just sit and wait. As I said earlier, the tax office wins more than me If I trade, not to mention that I risk making the wrong call and missing the key point to trade all together - the only loser in that scenario is me. The alternative is to not trade and be confident in the company's future - this is where I am at, so many possibilities in a market where people are looking for a place to put their cash and a future SP far greater than now.
Observation point: I get the trading view, and good luck to those that take it, but I have not waited 4 years to sell on the first major rise, especially considering the market (and environmental) forces at work now.
8. There are lots of posters bagging the company lately and trying to suggest that the price will drop. Maybe it will, maybe it won't.
Observation point: nobody knows, I figure look at the fundamentals, look at the sector, look at the shift to clean energy and look at all the potential announcements that could come any day - my take away, I'm not selling to try and leverage the perfect position. The one I have is good enough. The risk of selling to try and make a bit of extra coin is far outweighed by the benefit of holding and not having to worry about it and potentially missing it. Also, don't be swayed by others subtle suggestions you should sell, make up your own mind.9. Lots of posters lately.
Observation point: everyone has an agenda - even me. I can declare mine as believing in the future of this company and its prospects. I am a committed shareholder, I believe in the 'green' revolution, but absolutely I would like to make some money - I think that those that hang around will.
I would put in one of those 'this is not investment advice' statements, but I think we all get it.
Great volume lately, GLTA and GLTATHMO.
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