The very first thing I learned as an investor is to “buy low and sell high“. For anyone reading this, the previous statement may seem most trivial, but I assure you that it’s absolutely not!
In fact, over the years, another observation I’ve made (without a shadow of a doubt) is this — Buying low is by far the most difficult and challenging thing you can ever do with investing!
It ain’t easy going against the grain… When Mr. Market (along with all your peers, family, friends, etc.) is telling you that your investment thesis is 1,000% WRONG, without question, you feel like a total idiot everytime you attempt to buy as you continue to accumulate and build up your position in whatever asset you are targeting…
With Ivanhoe Mines (IVN.TO/IVPAF), man, let me tell you, it sure as hell wasn’t easy buying up shares hand over fist during the fall of 2015 when the entire world hated mining stocks…
In fact, when you are observing the following NASTY, negative death spiral, seriously, who in their right mind would even want to attempt to catch such a falling knife?!?
Fundamentals be damned…
Indeed…
So, you can of course understand why in the fall of 2015, when I was pounding on the table about how ridiculously undervalued mining stocks were (such as Ivanhoe Mines), I lost a boatload of readers… with many questioning whether or I not I had completely lost all my marbles…
At a time when so many other bloggers and investors were fixated on cash flow/passive income alone, I assure you again that it was not easy in the least bit to go against the crowds and to do something that was pretty drastic from the norm (e.g. rental properties and dividend growth stocks)…
But after my own due diligence and research, I was convinced that market cycles ultimately win out, and again, it was back to the basics of, “buy low and sell high.”
That, and as I believed then (and still do today), in the end, it’s total returns that matter most… In other words, yes, cash flow/passive income is the name of the game needed to sustain early FI (for perpetuity), but profits are profits, and net worth can indeed be converted into cash flow/passive income later on!
Convinced that I actually knew what I was doing, I embarked on a new path towards early FI…
I started buying shares of IVPAF… As many as I could…
When I was doing so, the stock chart of IVN.TO looked like this…
November 20, 2015.
And now, a little over a year later, the stock chart of IVN.TO has recovered to look like this…
January 23, 2017.
My original cost basis was 65,000 shares of IVPAF @ $0.522 USD/share.
Along the way, I started to trim my position to reduce my cost basis, and by the start of yesterday’s trading session, I owned 50,000 shares of IVPAF @ $0.158 USD/share. In Canada (the native market), IVN.TO eclipsed C$4.00/share, at which point a strong SELL SIGNAL went off in my head…
I gotta tell you, when it comes to investing, the most difficult thing in the world to do is to buy low…
What’s the second hardest thing to do?
Sell high!
It is a NEVER ENDING struggle between Fear vs. Greed.
Nevertheless, I had to do what I thought was best for my own situation…
I booked my profits and cashed out all 50,000 shares of IVPAF @ $3.0149 USD/share, for net proceeds of over $150,000 USD.
Shares of IVN.TO/IVPAF are up over 57% YTD… and the first month of 2017 isn’t even over yet!!
And here’s the share price performance of IVN.TO over the course of 1 full year… Up 638%!
The stock is on fire! Can Ivanhoe Mines keep going up?
Fundamentally speaking, absolutely…
Ivanhoe Mines is backed by world class management, geologists, joint venture partners, investors, etc… and they have an ownership stake in three world class Tier-1 assets.
If I had to go with my gut instincts, I would speculate that C$5.00/share, C$6.00/share, and perhaps even higher are within the realm of possibility (and realism) sometime later this year for IVN.TO…
With that said, as I’m fully aware, my gut instincts are frequently wrong, and bottom line, when it comes down to it, I know absolutely jack shit about anything…
Your guess is as good as mine!
But I do believe that the markets ALWAYS have a way of humbling us, so really, almost nothing that happens from this point forward would surprise me…
However, at the aftermath of selling after an insane rally to start the new year, I would guess that many investors would conclude my actions of the day as being entirely too “conservative”…
Funny how that works, right? When I was buying up shares of Ivanhoe Mines at around C$0.65/share, so many people thought that I was the village idiot… Now that I’m selling out “prematurely” and into greed, I’ll probably be labeled as being too impatient…
It is what it is…
Here’s my own belief with investing — You’ll NEVER be able to perfectly catch the top and bottom… You just want to get into an asset when the downside risks are minimal and the upside potential tremendous… With Ivanhoe Mines, I’m exiting off the stage with realized gains (pre-tax) of $142,758.64…
Yes, for some investors, this type of profit is indeed “peanuts” and “small potatoes”…
For myself, quite honestly, these gains (in a span of a little more than 1 full year) are more than I could have ever dreamed possible… Even after accounting for taxes and all that jazz, I should still be able to walk away with enough proceeds to either:
A) Fully pay off one of my rental units.
B) Purchase a new rental property with 100% cash and no loan.
Everything is relative…
In my eyes, this is a spectacular win, regardless of whatever transpires from here… And as of this moment in time, Ivanhoe Mines ranks as the single best investment decision that I have ever made in my life.
Better than the S&P 500 in 2009.
Better than Bay Area real estate in 2012.
Better than Tesla Motors (TSLA) in 2013.
Etc…
So, no, you don’t have to worry about any kind of Fear of Missing Out (FOMO) infiltrating into my mind… In fact, should shares of IVN.TO/IVPAF continue running up well passed $5.00/share, $6.00/share, $10.00/share, etc…, I do believe that my only thoughts will be, “Good for the company and its shareholders…”
I will have no regrets…
Again, selling high ain’t ever going to be an easy thing to do… And I have no crystal ball…
I’m just doing what I think is best for my own unique situation…
And you should too!
Regardless of what anyone else thinks or says…
Fight On!
Congrats! That’s one hell of a trade. I’ve never had anywhere near that amount of unrealized gains on the table, I’d probably be shaking in my boots afraid of losing it and would have sold out long, long ago. Stumbled upon your blog in the middle of 2016 and had never even considered investing in miners - now i’m completely hooked. Sure wish I was more “miner literate” back then. It’s been a wild ride, but after ~7 months of non-stop reading and researching, I finally feel like I understand the basics of the space. Anyway, just wanted to say… Read more »
Jay,
Thanks! Yeah, definitely there were times when I was shaking in my boots and afraid of losing the gains… I think that’s perfectly normal and a part of human nature…
Mining stocks can be extremely lucrative; I am glad you took the time necessary to get educated… Like any other asset class, tremendous gains can be made, but entry/exit points are very important… Mining stocks ain’t Buy and Hold Forever investments, that’ for sure…
All the best!
Now just imagine - off of one killer trade you can pretty easily convert that into $1,000+ passive income per month, FOR LIFE! Do that a half dozen times… and you’re set for life. That’s my plan anyway. Cheers!
Jay,
I love your line of thinking! My thoughts exactly.. A few big wins converted to cash flow and you are set for life! 🙂
All the best!
Great thinking. That’s probably something we should be doing with a certain percentage of all our profits from investments (building passive income). What financial instrument would you invest those profits in to ensure the $1000 passive income each month?
Chris,
Probably real estate.
Cheers!
That’s one hell of a ride. I’ve been caught by trying to catch a falling knife before, so seeing this is always a welcome sight to me. All the best for the future.
Buy, Hold Long,
Yup, I own my fair share of investments that are right now looking like I was “catching a falling knife”…
It’s tough to succeed with every investment, and sometimes they work out, and other times they don’t… It’s all part of the process.
Can’t win em all… But that shouldn’t stop us from seeking out opportunities and deals either!
Take care!
What a ride it has been,i had something similar with SCSS when it went all the way down to less than dollar and now its trading at above 20.But i didnt get to ride it full.
desidividend,
Wow, that’s another example of an incredible ride! Yeah, it’s always tough trying to time these entry/exit points, but it still looks like you made out very well with this trade!
Cheers!
Greatest investment … so far! Congrats on the trade. The waiting for investments to pan out can be difficult, at least for me!
I’d be interested to see what you use you’re new capital for. Paying off a rental or buying a new one sounds like a nice bump to the passive income stream.
FP,
In regards to the capital gains, my preference is to hold the cash and try and convert the net worth into more passive income/cash flow… My main focus all along, even though it may not always appear that way in the thick of it…
These appreciation plays, all along, have always been intended to be converted into assets that produce yield… As much as I like mining stocks, I’ve never looked at them as Buy and Hold Forever type of investments…
Stable, yielding assets, are… 🙂
Cheers!
Those rides are good tests for the heart. I had a similar situation in mining also, VALE, bought it when it was crazy low, $2.15 a share, went up to $5.50 and I pulled out, its now at ~$10. Its all about the patience that I have none. 🙂
D4F,
Wow, I didn’t realize that VALE had surged so much! Congrats on getting in on that ridiculously low price!
Mining stocks sure due test your heart and patience, indeed!
Take care!
Congrats on the trade. I wished I had jumped into Ivanhoe a year ago.
SG,
Thanks! Yeah, Ivanhoe has been on a tear lately… Looking back, it was very difficult to see/forecast these type of gains… Just a year ago, base metals looked to be dead in the water…
Goes to show how unpredictable these markets really are!
Cheers!
Congrats! Is another option you may go with on your proceeds to invest in more stocks? Or are you mainly focused with your gains to go with one of the two real estate options you mentioned?
Wishing you the best,
A
A,
Buying more stocks is always an option, but I’m in no rush at all… Unless I locate a “smoking deal”, or a sector goes into deep liquidation again (like gold/silver this past fall and into December 2016), I’ll most likely just stand pat and wait for a good cash flowing deal…
My main focus is to covert the proceeds into more cash flow, probably through a rental property… Or, if dividend growth stocks start to tank for whatever reason….
We’ll see!
Best wishes!
Great trade and congratulations! It takes guts and conviction to bet against the grain, especially when the technicals are against you. Cheers to a job well done!
Awesome,
Thanks! It wasn’t easy but I did have full conviction that the stock would go up at some point… I was speculating between 3-5 years, but I’ll gladly book these gains after just a little more than 1 year…
Markets are impossible to time… Just got to know where you are roughly at.
Take care!
Nicely done. That amount of money will last you a while in Vietnam!
Tawcan,
Yup, those type of gains should help sustain the early FI lifestyle for quite a number of years… In Vietnam, I’m pretty certain the majority of people here won’t make that much amount of money in a lifetime… Not hating at all, but that’s just the reality of the situation…
I’m very thankful for the gains and opportunities available to me.
Cheers!
Beautifully executed, Jay! IVN is one helluva company and it mustve been hard to sell and book those profits…but when a sector and stock performs like this in such a short duration, you cant help but take the money off the table.
Congrats on this trade. You inspire us all 🙂
R2R
Sabeel,
Thanks for the support buddy! It’s been great sharing the journey along with you, and I’ve gained quite a bit of insights through our conversations… Ivanhoe was an anomaly, no doubt, and it’ll be very hard to replicate these type of results again…
Keep up the good fight!
All the best!
Hi Jay. Congrats on your success! I brought in late ’15 and ’16 between US$0.4 and $0.84 and took a free ride Oct 2016. My buy in was only $2.5K thought, not the same. But anyway, buying Ivanhoe in late ’15 and early ’16 when the company was selling for almost the cash in the bank, 3 world-class projects and Friedland was easier than almost any buy I ever made. It was kind of hard to find a excuse not too. Glad I did. But it’s much harder now. I took a free ride and have about $6K free carry… Read more »
Tigua,
Awesome gains there and congrats to you as well on Ivanhoe! This stock has definitely made a lot of shareholders ecstatic! 🙂
Taking a free ride is always a wonderful idea; these mining stocks are beyond volatile… That’s the best way to ease one’s mind as we wait for the gains to come in. I started trimming shares of Ivanhoe last fall, and was already essentially free carried before I cashed out for good.
Take care!
Congrats. I listened to you and made some money off of B2G and IAG. I picked I Am Gold because I liked the name haha.. The power of someone else doing your homework for you. Now, the trick is to never look back or you will drive yourself nuts. Even if Ivanhoe is at $10/share in a year, you still made money.
Jp,
Congrats there on the wins buddy! So glad that you joined the fray last year and got to capitalize on the turn in mining stocks! 🙂
Yup, you got that right — It’s time to move on and not look back. I made more money that I ever thought I would with this stock, so no regrets.
Cheers!
It can go one of two ways. I bought Vestas (VWSYF) at $6 after the recession played out and it is at $68 today. I’ll probably hold this trade of my life ‘forever’ because I like wind energy and its growth potential still.
On the other hand, I bought Tesla at $30 and sold at $90. I couldn’t sell fast enough to lock in that return, considering how much of the price is due to hype.
From what I’ve seen of the mining industry, taking your $$$ when the going is good seems like the wiser path. Congratulations!
Reepekg,
Good point, each situation is different. With mining stocks, yup, I’d say they aren’t suitable for Buy and Hold Forever (unless we are talking about streaming and royalty companies), so like Tesla there will come a time to sell into the hype.
Cheers!
So awesome. Trades like this will help with your word travels. Congrats.
Nathan,
Thanks! Yup, gains like these will fund many years of world travel. 🙂
Best wishes!
Congratulations Jay. You seem to have real skill at finding deep value. Since reliable passive income appears to be a main goal of yours, do you have a monthly amount that you are shooting for in the near or long term?
Midwestern Landlord,
Thanks! I just do the best that I can, and try to focus on macro trends more than anything else.
In regards to passive income, probably somewhere along the lines of $8-10k/month would be more than enough… $10k/month is a nice, round number, so let’s aim for that!
Just need some good deals to emerge, but I’ll do my best to wait it out and be patient.
Trying my best not to force the issue, as much as I would like to boost the cash flow.
Cheers!
Congrats on the awesome trade Jay. I too have problems with selling my stocks at the right time, often I have been way early. While you made a KILLING there, were you not tempted to maybe sell half the shares and hold onto the other half? As a fellow Invahoe investor (at a much higher cost than you) I don’t want to sell all my shares because I think the company is still on track to outperform. I am loathe to dump all the shares and lose out on the upside to come. Still being fearful while others are greedy… Read more »
cavemann,
Thanks! Yes, I had many thoughts of just holding on a half parcel, or smaller sized portion, but ultimately the gains were good enough where I decided to just close the chapter on this investment.
Selling into greed is my most preferred way of trading and exiting out.
Cheers!
Congratulation.
Sometimes when you swing hard enough and are patient enough to wait for your pitch you can, and you did, hit a homerun !
Good for you.
LeDividende,
Thanks! Yup, this one was indeed a homerun for me and my best investment ever.
These are rare, so I’m doing my best to savor the win.
All the best!
Sweet I just cashed out after reading this haha 😉 Thanks!
Sharon,
LOL, I could be totally wrong on my call to sell now! 😉
But I’m so glad you made a lot of $$$ on this trade :)))
Cheers!
I sold out of most of an asset at ~$10 million. Have watched it subsequently run up to over $150 million. This may be a level at which there are some mild regrets… 😉
However it is still plenty to enjoy a life of leisure!
Joe,
Wow, that’s quite the run, but it’s always hard to time these things perfectly… I’m not going to stress too much about it… I got the gains I was after, so I’m more than content with leaving some profits on the table.
Best wishes!
Congratulations Jay on your big killing. Your methodology towards FI appeals to me, and your blog gives readers lots of encouragement until we can achieve that goal. As for me, I love my career and would have a hard time leaving it. Maybe I would cut back and reserve more time for the family. But everyone’s definition of FI is different and that’s the beauty of engaging in this pursuit. I can’t wait to read about your next big return!
James,
Thanks for the support! I’m glad you love your career, it will give you a ton of options down the line, even post-FI.
Yup, early FI is different for everyone, just find your beach and enjoy the journey.
Take care!
Congrats on that, fantastic achievement.
However, what about the overall picture…how about the other stocks that have gone down, what does the total picture look like today..? 1 stock that has gone up $150k, and 10 stocks that have gone down ??
Paul,
Yup, I’ve got many losers to accompany my winners, unfortunately. I’ll post an update soon, it’s long overdue.
Cheers!
“And here’s the share price performance of IVN.TO over the course of 1 full year… Up 638”
GREEEEAT deal!!!!
Congrats FI FIGHTER!!
Alesso,
Thanks! 638% gain in 1 year is pretty incredible! Surreal, even…
All the best!
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