Thanks Bretto. I've also been watching with interest the performance of these stocks. I think we're seeing some short term weakness in a lot of speculative companies. Given the speculative nature of the companies I'm happy to speculate as to why. We've all read a lot lately about the amount of brand new investors into the market over the last few months - and we've seen the ability of Reddit to really pump prices up. EXR benefited from that exact phenomenon (that's my view anyway). As much as I like anything that causes the price to go up - I was a little concerned at the same time about the expectations of investors, particularly thousands of small investors.
While they have the collective ability to push prices up, they also have the collective ability to push prices down. That combination of FOMO on the way up and then panic on the way down is deadly. You often here figures like 90% of stock market investors lose which gets me scratching my head. If you avoid FOMO, but even more importantly panic, and have a balanced portfolio then it's hard to imagine how 90% of people could lose.
A good example of this is ADD from the list. I had a friend contact me a couple of weeks ago. He knows I'm an investor and he wanted to ask me what I thought about ADD. He told me everyone he knows has invested money in it. You'll note it's on our EXR portfolio list. Yesterday they released drilling results. The first of eight. I don't fully understand their business but the results didn't look that bad, and it's hole one of eight. The price dropped almost 25% in one day. That's irrational panic. How does the result from one hole of eight cause a company to lose 25% of its market cap? It's actually absurd. Other than that the management of the company appear to have a sound plan and are executing on it.
My suspicion is that a lot of the 'reddit' money and less experienced investor money is in the speculative end of the market. As we've seen the prices dropping it's causing momentum as these new investors panic and sell. I think we'll see stability when that money has washed through. Remember, speculative companies, including EXR, have a much larger percentage of their register in the hands of retail investors. This will always cause more and greater irrational movement. As the company gets bigger and more institutional money moves in it'll steady the ship.
@Firezone has been pointing out this exact issue with out register for some time.
As to the register, note how the Top 20 held firm over the last few months. I know when I first started investing I FOMO bought and panic sold a couple of shares. Those companies have gone on to significantly higher levels than what I sold out at. Lesson learned for me. Thoise selling irrationally, especially when you consider the ongoing de-risking of this company, may learn the same lesson in time. The smarter among us can learn the lesson from the mistakes of others and avoid them ourselves.
Obviously I'm bullish on the prospects of EXR, I think the SP has become detached from reality but eventually they will reconcile and we'll all be telling ourselves what canny investors we are. The truth is the only smarts you need are good nerves, and if wild price fluctuations - which will happen over and over - are not to your risk profile, then this may be the wrong end of the market to invest. For those with the nerve to hold the potential gains are enormous, while the potential loss is limited to what you invested.
As for my advice to my friend on ADD:
