JG your entire trading strategy is based on HC news. If you're...

JG your entire trading strategy is based on HC news. If you're hearing about it on HC, odds are it's priced into the market.

Here's a few fundamental questions to guide you.

If you bought at 13 cents, and the market cap was about $340m and you're reading 25 by 25, which implies a market cap of $652m. You have to ask yourself, what is going to make this stock worth an extra $310m?

That's almost double the value. So you're looking for information that implies that it should be worth almost twice as much.

As a segue - a stock that is not in production is being valued on the anticipation of future returns (profit/divs and cap growth) in the long-run and future returns and short-term trading opportunities in the short-run. So when you are buying at 13c, reading all this hype in the forum, do you think the stock will be overbought or oversold at that point in time?

If 25 by 25 was such a sure thing, why would anyone be selling it?

Back to the point about doubling the market cap. When we're thinking about catalysts for doubling the market cap, you're thinking about things that will improve future profits of the business and then this is discounted back the present or your thinking about things that derisk the business.

Offtake agreements, for example, do both. You're locking in a customer which de-risks your investment and depending on the agreement, may specify the price which, if above expectation, can increase expectation of future profits.

Announcements such as this need to be digested by the market and in most cases the short-term price change overshoots what can be fundamentally expected from the announcement information and then pulls back, often again overshooting the mark, before settling into a new trading range. This is because people like yourself get caught in the mania and lose the ability to be rational (no offence). This is where the short term traders swoop in and take advantage of people willing to buy their stock at inflated prices.

Unless a new ore body is found, or unexpectedly high mineralisation. I'd be wary of anything that proclaims to double the market cap of a stock.

One last point - stocks that are seriously undervalued are little known to the broader market. This stock is consistently in the most spoken about stocks on Hot Copper (not sure why). This means that a lot of people are trading on this stock, so it's less likely to be significantly undervalued (more people paying attention, the more research conducted, the higher chance it's not undervalued). There are a whole number of cognitive biases that further compound this.

So, before buying into a stock, I would;

- Do your fundamental research
- Write down all the things you think will drive long-term value
- Write down all the news expected to come out and how you think it will impact the price
- Assess the level of mania over the stock (HC is a great place to start)
- Decide if it's a good time to buy, or you could expect a pullback.

No one has a crystal ball, but after the run AUZ had, a pullback was coming.

I'd recommend doing some research and reading some basic finance books if you want to be able to discern for yourself.

This is all just IMO.

Good luck,
TB