Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
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Thanks UN,
It just got me thinking that understandably the BB's of the stock in question are (over) enthusiastic) for the "their" company to be a success and will minimise downside risk and really only talk about the upside.
But experience has shown me it rarely comes off so I started to see if the markets valuation was better than the future expectations of the acolytes which led me to my made-up metric, but I am defo going to use it to "calculate" what I think will be a more realistic chance of the upside being reached.
Getting the stock market right is not so easy! I know of a challenge of a stock market analysts compared to a random pick of stocks and generally there was no difference!
Crack pot - yes
Intriguing -yes
One ponder the angles of thought? - yes
Quick deduction / gut reaction.....hmmmmmm, crazier thoughts have fulfilled success
I see your thought process and logic, but is it logical..... ???
Some in our past used to think the world was flat ( not even going there that some nut jobs still think so)
Some in our past used to think that a so called god created this world in 7 days... hang on.... some still do.... deary me.
So you never know Wyn, you might be on something there ;)
Aside the jesting above, interesting angle to be considered as a balance tool
I had changed my stock picks over the last 18 months or so to look at aim and the ones I have been attracted to are all potential multibaggers. (Eve being one). So still using charts to time entry and exit I was prepared to wait longer to see if greater returns could be had rather than the 1-10% over 1-5 days on the ftse 350, as an objective that I used to previously target.
One of the conclusions I have come to is an understanding of risk reward.
If a stock (eve for example) is 2.5P and the general expectation is for it to very quickly be re-rated to 10p say, then it seems a no brainer, or at least a very good risk reward.
However if that's the case why isn't it already 10p or close to it? Clearly the market (cool unemotional sage heads that they are) see it DRAMATICALLY differently. So if you think its worth 10p with one final push and its currently 2.5p that's 4 times the current price.
By my new metric. that means its 4-1 against it happening or 75% chance of not making it. (doesn't mean it will go bust but at least it puts into perspective the odds the market is putting on success.)
At the very least it should work as a brake on over enthusiasm and possible over commitment.
Certainly I have had 2 or 3 in this last 12 months which have failed to deliver as expected and had they, the SP would be many multiples of where it was prior to "bad news" causing very large falls in the SP.
So its taken me a while but if you think Eve should be even 25p and its on course to get there in the next 12 months or so, then by my reckoning there is a 90% chance it wont based on the current SP (10-1)
This is my latest rule of thumb for high risk stocks.
It will inform the amount of capital i tie up in these stocks going forward.
Just thought I'd share my latest crack pot idea.