Category: Blog

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.

Introduction
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.

Conclusion
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:

http://www.tumblr.com/tagged/investing

Other streams you may be interested in include:

Trading: http://www.tumblr.com/tagged/trading

Stock Market: http://www.tumblr.com/tagged/stock%20market

NASDAQ Tumblr page: http://nasdaq.tumblr.com/

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

 

Sources:

http://www.quora.com/What-is-the-demographic-breakdown-of-Tumblr

http://www.tumblr.com/tagged/investing

http://www.tumblr.com/about

http://en.wikipedia.org/wiki/Tumblr

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

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

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

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.

Pin-vesting

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.

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:

 

Great articles:

 

Great book recommendations:

 

Company Presentations

 

Sources:

http://www.businessinsider.com/pinterests-traffic-explodes-to-23-million-uniques-2012-8

http://marketingland.com/social-network-demographics-pew-study-shows-who-uses-facebook-twitter-pinterest-others-21594

http://about.pinterest.com/

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:

• Pinterest
• Tumblr
• StumbleUpon
• Facebook
• Twitter
• Reddit
• YouTube
• LinkedIn
• StockTwits
• Investor Forums

Chapter 7 of The Mindless Investor focuses on the idea that aiming to be average is only going to get you average results.  In order to outperform the market, individual investors have to be willing to use tools and strategies that are different from “conventional” approaches.  It is important to remember that trading involves one party being right and one party being wrong.  To help shift the odds of being right in their favour, investors must be prepared to challenge traditional ideas of risk management and portfolio selection and adapt their approach to the modern market.

Key Point #1: You can’t outperform the market if you do what everyone else is doing

Being “normal” unfortunately is not something worth gloating about when it comes to investing.  By using strategies and approaches to the market that everyone else is using, the chances of outperforming the market diminish.  To get ahead of the pack, you have to be willing to use tools and strategies that help give you an edge.

Key Point #2: Everyone can’t be right at the same time

Every trade has two sides, but only one can be right at any given time.  Even though you might be confident in your decision to buy or sell, remember there is always another side to your trade. A good internal check is to ask why someone would want to sell when you’re buying or vice versa.

Key Point #3: Traditional methods of investing and managing risk don’t always work

Using traditional approaches to identifying investing/trading opportunities as well as traditional strategies to manage risk have proven themselves to be more susceptible to losses than “conventional” wisdom would have you believe, especially over the past 10 years.  According to The Mindless Investor, just because approaches to investing and managing risk are widely used, it doesn’t necessarily make them “safer” than other approaches.

We have analyzed the twitter usage of companies who attended VRIC 2013 in Vancouver and put together a highlight of their numbers. See who tweeted the most and when the most tweets were sent. This is social mining at its finest.