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Contrarian Investing and Junior Mining Stocks: An Interview with Benj Gallander and Ben Stadelmann

Contrarian investing is no easy feat.  You have to be willing to disagree with popular opinion and be willing to jump into a company or market that others have either shunned or abandoned outright.  Yet value investors as famous as Benjamin Graham and his star student Warren Buffet have both taken contrarian approaches, being ‘greedy when others are fearful, and fearful when others are greedy’.

At the 2013 Vancouver Resource Investment Conference, we had the opportunity to interview two notable Canadian contrarian value investors, founders of and authors on the subject of contrarian investing, Benj Gallander and Ben Stadelmann.  In our interview, they shared with us their perspective on the recent performance of junior mining sector, an area that has fallen out of favour with many investors.  They also shared a number of helpful tips for investors stepping into the market for the first time, including how to avoid some investing pitfalls as well as how to navigate investment conferences.

In part one of this interview, we asked Ben and Benj for their views on why junior mining companies haven’t done as well as larger cap companies. Here are their insightful (and sometimes contrarian) answers.

A tale of two markets

As the Dickens reference suggests, stock markets are experiencing the best of times and the worst of times. The fortunes for junior mining stocks have been very different than that of their larger cap counterparts as the chart (see below) showing respective performances suggests.

Contrarian Investing in Junior Mining Stocks: TSX Venture Performance vs S&P 500

For the juniors, it’s been a tough year with the TSX Venture (largely composed of junior mining and exploration stocks) struggling to gain any real traction.  On the other hand, indices that track larger and more global companies, such as the S&P 500 have done very well, even inching closer towards all-time highs.

When we asked Ben and Benj what their thoughts were on the disparity in performance they offered two interesting points to consider.

First, some degree of disparity in performance between an index of junior mining company stocks and an index of 500 large cap stocks, such as the stocks in the S&P 500, is to be expected.  After all, they each represent opposing sides of the market cap spectrum.

In June of 2012, for example, the range in market cap of the 500 companies in the S&P 500 was between .89 billion dollars and 546 billion dollars, with a median market cap of 11.29 billion. Conversely, the combined market cap of all 2256 companies listed in the TSX Venture as of January 2013 totaled 41.7 billion dollars.

Aside from being at opposing ends of the size spectrum, the S&P 500 and TSX Venture also represent opposing sides of the risk spectrum.  Large cap companies with stable or established earnings, multinational footprints and well-recognized brands and products are very different from junior exploration companies who often have no revenues and who are drilling holes in deserts and mountainsides across the globe.

According to Ben and Benj, both the macroeconomic forecast and some investor psychology may help to account for differing fortunes of large and junior companies.

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Social Media and Investing – StumbleUpon


As part of our special series on social media and investing, we take a look at the discovery engine and social network, StumbleUpon.

What is StumbleUpon?

StumbleUpon, founded in 2001, is primarily a discovery engine.  Unlike search-based engines (such as Google), discovery engines are useful for when you don’t know exactly what you’re looking for. In a typical web search users provide terms that describe the topic they’re interested in and the search engine will do the rest. But what happens if you can’t put into words exactly what it is you’re looking for? You can use a discovery engine.

A discovery engine, such as StumbleUpon, will learn your preferences based on the kinds of content you deem relevant and serve related content to you. StumbleUpon uses a process known as “collaborative filtering” to combine your personal preferences with preferences and opinions of others when looking at the same content.

The idea behind collaborative filtering is that if two people have the same opinion on one issue, they are more likely to have the same opinion on a different issue compared to having the same opinion as a person chosen at random.  For example, if you “like” something StumbleUpon serves you and it happens to be investor-oriented, StumbleUpon will then start serving you content that others have identified as being investor-oriented.  The more the engine learns about what you kind of content you like, the better it can predict what other content you might find interesting and relevant.

Where does StumbleUpon get these human opinions from? The data the discovery engine uses to make content suggestions comes from fellow users of StumbleUpon. Users of StumbleUpon (known as “stumblers”) can rate content by giving it a “thumbs up” or “thumbs down”, they can assign  keyword tags they believe are relevant to the content and they can provide additional commentary if they want to describe it in more detail. The pages other StumbleUpon users have liked and any commentary they’ve left will show up on their profile. Similar to Tumblr  or Pinterest (click to learn about Tumblr or here for Pinterest), users can follow the profiles of one another making StumbleUpon a social network. You can see what other people have liked and check those pages out as well.

Another way that you can view content through StumbleUpon is by putting in a key term or category in the search field called “Explore an interest”. This is where our experiment began.

The Experiment

There are many keywords and tags used in StumbleUpon to organize information. In this social media and investing experiment we wanted to see what kind of content we could find on StumbleUpon under the search term “investing”.  We started with “investing” because it is a main topic on StumbleUpon. If you like a page that doesn’t already exist on StumbleUpon the engine asks you to assign a main topic to it before assigning tags you feel are relevant to the content. It’s important to note, however, that there are various sub topics related to investing that are suggested by the discovery engine during your exploration such as “investment, “socially responsible investing” and “value investing” just to name a few.


We also tried the keyword “trading” and found other suggestions such as “online trading” and “share trading”.  These subtopics and suggestions give different results helping you discover more content online.


This is what we found for the keyword “investing”:



This is what we found for the keyword “trading”:



This is what we found for the phrase “stock market index”:


Each search brought back a variety of investing related content. Under “investing”, with the exception of a couple artistic photographs of trees, most of the results were related to investing and contained opinions from all over the web including major news networks like CNN, the Wall Street Journal and Fox Business. The more you scroll down the results page the more results get presented. Some providers can have a number of posts in StumbleUpon when users like their material. For example, we noticed that has many posts on StumbleUpon meaning that many stumblers find their content helpful and so give it a thumbs up helping to spread it further.

This brings to mind some limitations when using a discovery engine such as StumbleUpon.

The first is that different people have different ideas on what constitutes investing. You may disagree with how some of the content you come across has been classified (for example the tree pictures above belonging to the investment category). If, however, the ‘majority’ decides something is related to investing, that is what the discovery engine will also associate with the word “investing”.

The second limitation is that some of the content is sponsored meaning a user or company has paid StumbleUpon to serve that content to you when you’re exploring a topic. The probability that this type of content is promoting something is high so be aware of what you’re reading, who the author is and what the intent is behind the article.

Finally as with any other source of information on trading and investing, remember that what you’re reading is simply someone’s opinion and therefore should be taken with a grain of salt.


StumbleUpon is a great way to discover content around a topic of interest like investing if you have no particular query in mind. It allows you to view content on the web that other users have found to be relevant and have liked. In other words, by using StumbleUpon you are consuming content that has been filtered specifically for you based on your preferences and has been approved by members of a community who share a common interest.  Keep its limitations in mind when surfing to get the most out of the system. Stumbling is an adventure. See what you can discover.

Sources for Social Media and Investing – StumbleUpon

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Educational Resources to Learn About Investing in Junior Mining Stocks


Whether you are Warren Buffet or an ordinary do-it-yourself investor, doing your homework is vital to managing your investments successfully.  Almost all of the experts we’ve talked to have consistently told us the same thing: investors need to do their due diligence before making investment decisions.  Given the risks associated with investing, the advice is prudent, but even more so when you consider how much marketing investors are exposed to.

Because every company has a story to tell, seasoned investors learn to separate hype from fact and ask informed questions about potential investments before taking any kind of investing plunge.  For beginner investors, two common challenges to sound decision making are knowing what questions to ask and understanding what facts to look out for when assessing potential opportunities. To make matters more challenging, while there is a lot of information out there to help you learn about investing, finding good information can be onerous, sometimes requiring “Buffet-like” patience and scrutiny.

Understanding how to invest in junior mining companies

Given the popularity of junior mining stocks with investors and the enormously speculative nature of the investments, understanding some of the basics of mining and exploration is essential to navigating the sheer number of stories out there. While not a comprehensive list, experts often mention that when considering junior mining companies investors should pay attention to the following:

  • The mining company’s structure
  • The track record of the management team
  • The nature of the deposit itself
  • The jurisdiction of the project(s)

To help our readers with their homework, we have put together a selection of resources that help explain important points of investing in junior mining and exploration companies.   The resources we’ve gathered take a fundamental approach to understanding junior mining and exploration companies and cover information on topics such as understanding share structures, basic resource sector terms and concepts investors should be familiar with, how to read financial statements of mining companies and more.

As a note, these sources provide a good overview and starting point but are not intended to be exhaustive.  Keep in mind that the works likely reflect each author’s particular viewpoint and/or interests.  That said, we think these resources offer concise but informative ways of analyzing junior mining and exploration companies.

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Uncovering Junior Miner & Exploration Value and Acquisition Targets – An Interview with Sid Rajeev

At the 2013 Cambridge House Vancouver Resource Investment Conference (VRIC), Sid Rajeev, the head of research at Fundamental Research Corporation, presented his outlook on 2013 and why mergers and acquisitions (M&A) might be something investors want to put on their radar for the upcoming year.  In particular, Rajeev focused on the mining and exploration sectors and laid out his reasoning as to why increased M&A activities are likely to continue over the near to mid-term.

The presentation itself was well-laid out and explained five key factors acquiring companies use when considering a purchase, such as

  1. Location & quality of assets
  2. Synergies
  3. Stage of development
  4. Financial position
  5. Valuation

To access the slide deck from the presentation, click here.

Paying attention to costs

What was most interesting about this particular presentation was the connection Rajeev made between the performance of precious metal prices relative to the performance of the TSX Venture and precious metal companies.  Specifically, he highlighted that free cash flows for mining companies have dropped 39% per annum in the past three years largely as a result of increasing capital costs.

In other words, the cost of developing mines has increased substantially leaving less money in the hands of the companies themselves.   As a result, in order for larger mining companies to pursue a project (and the smaller companies that may be running them), the economics have to make sense in this high cost environment.    This helps to explain why there has been such a divergence between the rising prices in precious metals without an expected increase in the stock prices of mining companies for precious metals.

For investors, this means that the fundamental case for investing has to factor in rising costs, something that introduces substantial uncertainty when trying to value a potential investment.  For risk-averse investors, steering clear of uncertainty has made more sense than embracing it.  With all the pessimism, however, stock prices on quality projects (i.e. those where the economics and costs are contained) have become attractive, which is the base case for Rajeev’s outlook that 2013 might see increased M&A activities.

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Social Media and Investing – Tumblr

There are various resources one can use when researching investing information or investment opportunities. Social media is increasingly becoming one of those channels. We continue our series on using social media tools to discover or learn about investment opportunities, strategies or resources, by focusing on the microblogging platform and social network Tumblr.

What is it?
Founded in February 2007, Tumblr is a microblogging platform with 94.4 million blogs and 43.4 billion posts. As a microblog it has content that is generally smaller than a traditional blog both in length and file size. Tumblr can be used to broadcast various forms of media including text, images, links, chats, audio and video.


Users can also follow other users’ blogs which makes the platform a social network. While you can view posts without signing up to the platform you must be a member to follow other blogs.

The Experiment
Tumblr encourages participants to “follow the world’s creators” and is well suited to writers and artists. Nevertheless we were excited to do a search for “investing” on the platform. After all, at the time this post was written there were 84,354,543 posts published and we figured that at least some of them have to do with investing. We were not disappointed.  Tumblr returned what felt like a never-ending stream of content on investing related topics which included a mix of opinions on specific stocks, educational articles, infographics and images as well as videos.

Here are a few things to keep in mind when you’re looking through a stream on Tumblr. The first is to remember that this microblogging and social network is essentially a stream of blogs that represents a collection of opinions. The varied nature of the content on the stream is different than conventional information sources and layouts.  There is no real ‘organization’ per se, it is just a flow of related content that is geared towards ‘browsing’ or ‘surfing’.   Tumblr is an interesting way to consume user-driven content because you get to connect to a community around shared content interests.

The second point to consider when on Tumblr is that not all the results have to do with trading/investing. While we found many posts that were specifically about the stock market, investing and trading, there were also articles about renewable energy, real estate, startups and crowd-funding. The results you find depend on how a writer tags a post. Tagging is the process of assigning a hashtag (e.g. #trading, #investing or #money) to the topics that the writer feels are most relevant to the article and is a great way of having their post be found. Another way of optimizing posts to be found  is using keywords within the post. When you search for a keyword or topic on Tumblr, all posts that have that keyword in the post or as a hashtag are served for you to read. It is also worth noting that the majority of posts are American. However, the content of many of these posts cross borders as they discuss stocks and give opinions that Canadians can use in their trading.

The final thing to keep in mind is that some of the posts are entirely promotional. Like other social media channels, savvy companies utilize their blogs and posts to reach users looking for investing information. Be aware of who the author is of any posting to get a better idea of when you’re being sold something. Below is an example of a promotional post we found on Tumblr.


There are many posts on investing on Tumblr. You can find opinions, learn about new companies, review another trader’s stock picks or just learn something new. You can also participate in the conversation by posting your own opinions or reposting the opinions that you want to comment on with your own two cents. We recommend taking a look through the platform to see what you can discover.

To view the investing stream go to:

Other streams you may be interested in include:


Stock Market:

NASDAQ Tumblr page:

[Note: we have found that viewing a stream when you are logged in gives different results than viewing it when you are not.]



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The Mindless Investor Chapter 8 – You Should Not Do Fundamental Analysis

In chapter 8 of The Mindless Investor, the spotlight is on a popular approach to investing – fundamental analysis and why, according to Tyler Bollhorn, it is an inefficient approach for most small investors/traders to take when evaluating opportunities to invest in. The apparent popularity of fundamental analysis might not be driven by whether or not it works, but rather because it has been around for a long time.

Key Point #1: Fundamental Research is Expensive

Mindless Investor Ch8 Point 1 - Fundamental Analysis Takes Lots of Effort

An often heard phrase is that investors need to “do their homework”.  When it comes to fundamental analysis, however, that homework can be both extensive and expensive.  Large investors have the means and the motivation to pick through financial report after financial report, contact management and conduct extensive due diligence before considering where to park millions of dollars.  For smaller investors who don’t have the same scale of resources, conducting extensive and in-depth fundamental analysis might not be the most efficient or effective approach.

Key Point #2: Fundamental Analysis is Recommended Because it isn’t New

Mindless Investor Ch8 Point 2 - Fundamental Analysis is Familiar

The financial industry, in spite of all the risks it takes, strives to mitigate risk.  The risk of getting sued for being innovative is easy to mitigate if you simply go with the status quo.  According to The Mindless Investor, the financial industry continues to push fundamental analysis because nobody questions the “conventional wisdom” of fundamental analysis.

Key Point #3: Even Fundamental Analysis gets it Wrong

Mindless Investor Ch8 Point 3 - Even Fundamental Analysis Gets It Wrong

Even with all the data crunching that fundamental analysis entails, it can still lead to mistakes and bad decisions.  While the future is uncertain for all participants, seeking comfort in numbers can sometimes lead to a false sense of security. The approach The Mindless Investor favours is to not let fundamental analysis obscure investors from paying attention to the market’s message.  Because fundamental analysis involves such extensive research, those who do it not only invest in a company but also invest in their research process, something that can make letting go of a bad stock difficult even though the market is telling you to do so.

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Social Media and Investing – Pinterest


Social media is increasingly becoming a channel that people are turning to online in order to learn and research when investing. As part of our series on using  social media tools to discover or learn about investment opportunities, strategies or resources, we start by focusing on the third largest social network known as Pinterest.

What is Pinterest?

Launched in 2010, Pinterest is a virtual pinboard, where users can “pin” interesting things (represented by images) they’ve found on the web, repin what others have pinned as well as like and comment on other people’s pins. Pins are images that get uploaded or saved to Pinterest, with each pin containing a link to the source of the image, often an external website.

What is significant about this tool is that it taps into the essence of what people like: pictures.

Neural marketing tells us that we are visual creatures and we love to look at beautiful pictures of people, places and things. Pinterest is especially popular with women between the ages of 18 and 49.  The site gets more than 1.7 billion monthly pageviews and users can pin anything from recipes to DIY projects, fashion, beauty, pets and more.

Recently, it was reported that Pinterest the company is looking to raise capital to grow itself, and is reportedly trying to value itself as being worth $2.5 billion dollars.

The Experiment:

Being the curious lot we are, we wanted to see what we could find on Pinterest that would be relevant to investing. Going into the project we weren’t expecting a lot. After all, investing and beautiful imagery don’t often go hand in hand.

investing search pinterest
The results from our search for “investing” on Pinterest as of February 6th 2013.

At first glance it looked like we had our work cut out for us. Most results when searching for “investing” on pinterest contained beautiful images of clothes, shoes, and tools one should invest in like cameras or real estate agents. The Carrie Bradshaw quote “I like my money right where I can see it, hanging in my closet” eloquently captured exactly what we initially found on the site.

Undeterred, we dug  deeper and realized that there was a lot more there for investors looking for information, education, or even investment ideas. In the spirit of pinterest, we’ve collected a few investor themed pieces we thought you would enjoy.

Check out our “pinboard” of interesting investing related information on Pinterest, including infographics, articles and much more.

Favorite infographics:

Essential Facts for the Medium-Low Risk Investor
International Investing
The Silver Series
Direct Participation – Oil Investments


Great articles:

Need a better investment strategy? Listen to a woman
How to earn regular income from stock investing via dividends


Great book recommendations:


Creating a portfolio like Warren Buffett
The Bogleheads’ Guide to Investing

The 25 habits of highly successful investors

Market Sense And Nonsense

Company Presentations

Rare Earth Technology Package From London Commodity Markets



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Social Media and Investing – Series Introduction

Investors are always on the hunt for information that will put them one step ahead of everyone else in the market.

In the past, the sources of information for investors included newspapers and television news programs, company annual reports, investment advisors and brokers, the stock exchange itself as well as investor conferences and tradeshows just to name a few.  Countless surveys and research have shown that one of the most powerful sources of information about investing is from other investors, be they family, friends or other trusted sources.

While turning to one’s social network to get information is not new, over the last few years, it has become increasingly easy to do.  Moreover, it is now possible to tap into the networks of one’s own network. No longer are do-it-yourself investors limited to traditional channels for information; investors can now also use social media as part of their information matrix.

This special series on investing and social media analyzes the various social networks/platforms to understand what kinds of resources and hazards they hold for retail investors.

The networks we will be covering include:

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Getting to the bottom of who’s on top of Canada’s discount brokerage market

In search of Canada’s best discount brokerage

Getting to the bottom of who’s on top in the Canadian discount brokerage market is a lot trickier than it seems.  After all, one would assume that winning the crown of “best discount brokerage” is fairly difficult to do and also when a discount brokerage gets that award, it means they’re actually “the best”.  In our ongoing search to find an answer to the popular question “who is Canada’s best discount broker?”, we found a curious answer – it depends on what is being measured.

Over the past year, 7 of the 14 Canadian discount brokerages have been given titles such as:

  • Canada’s #1 Direct Investing Brokerage
  • Best Canadian Online Broker
  • Canada’s Top Online Discount Brokerage
  • Best Discount Brokerage
  • #1 Online Brokerage for Client Service in Canada
  • Highest in Investor Satisfaction
  • Top Bank-Owned Online Brokerage

With so many high achievers to choose from, it seems hard to believe that Canadians would have any kind of struggle finding a great discount brokerage.  According to these stats, almost 50% of the Canadian discount brokerage providers are “the best” at something, if not the best outright. It stands to reason that if the discount brokerages are doing such a great job, then clients would also be satisfied with the service they are getting.  The data, however, paints a different picture.

Best Discount Brokerages in Canada

To find out more, click the link for Page 2 below.

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Desjardins Group buying a piece of Qtrade

Desjardins Group invests in Qtrade for the long-term

Desjardins Group, parent to discount brokerage Disnat, announced earlier this week that they are taking a significant ownership stake in Qtrade Financial Group.  Desjardins has committed to purchasing between 25 to 40% of Qtrade’s outstanding shares initially with the option to acquire the remaining shares within six years.

According to the arrangement between the two companies, Qtrade will continue to operate independently retaining its brand name and current leadership.  With regards to the discount brokerage component specifically, both Desjardins and Qtrade state that for the foreseeable future it will be business as usual.

Ron Cann, Qtrade’s VP of Marketing and Communications, says that the focus will continue to be on delivering a quality experience, something that Qtrade’s discount brokerage has earned top honours for from the Globe and Mail and Morningstar in recent years.  From Desjardins perspective, director of media relations André Chapleau says that the near term will be a time of learning – one in which the opportunities to build synergies will be explored.

Even though these two companies are going to operate independently, and they both seem committed to continuously improving their offerings for Canadian investors, there are still some wrinkles to iron out. Specifically, will Disnat, the discount brokerage side of Desjardins and Qtrade’s discount brokerage business compete directly with one another?  While there might be some overlap, each side seems to feel that their respective target client base is diverse enough in terms of trading style (active trader vs long term investor) and geography (Quebec vs Western Canada) that competition is not really a focal point.  The alignment of Qtrade and Disnat as alternatives to the big-bank owned discount brokerages is what both parties see as a value add for their respective clients and partners.