Doug Casey, Rick Rule and Frank Holmes share their investments strategies, past failures and stock picks.
At this year’s Silver and Gold Summit, hosted by Cambridge House in San Francisco, California, the fund management panel featuring Doug Casey, Rick Rule and Frank Holmes was one of the highlights.
Moderated by Marin Katusa of Katusa Research, the talk gave attendees the chance to learn more about the panelists’ investments ideas, past successes and failures, and stock picks.
During the 30-minute discussion, Katusa asked participants to share their fund management expertise with the audience, including how to deal with stress and learn from mistakes. Read on to find out what they said.
To start, Katusa asked participants how they manage the pressure and stress when making big deals. Rule of Sprott US Holdings said he doesn’t feel any tension as he has fairly rational expectations. “The expectation on any individual speculation is failure [and that] you are going to lose 20-25 percent. [But] you make so much money on the [speculations] that work well that it amortizes the stupidity in the rest of your portfolio,” he added.
For his part, Holmes, who is CEO and chief investment officer of US Global Investors, argued that everyone has their own self-expectations and self-greed, and in order to feel calm he highlighted the importance of meditation, exercise and gratitude. “You have to be thankful for all your blessings [as that] neutralizes all the negative emotions,” he explained.
Katusa then asked the panelists what was the key factor when making a deal, and both Rule and Holmes agreed that the team behind any project was crucial.
“[Finding] high quality people is the hardest part, in particular for a mutual fund where you need at least 21 great CEOs, which makes it even more difficult,” Holmes said.
Rule echoed that comment and added that world-class CEOs are extraordinarily approachable, “they like nothing so much as to talk about what they do for a living.”
Learning from failure
When asked to describe a time he learned from a mistake, Casey of Casey Research said he had to recently deal with the fact that his interests have changed during the years and he is currently doing it more for “the academic point of view than a practical perspective.”
When the conversation shifted to Rule, he shared with the audience that his biggest mistake has been “the occasional urge to do something when there is nothing to do.” But he said that remembering that the expectation is failure, and the ability to absorb pain helps to deal with any situation.
Katusa added that another lesson to be learned from his own past failures was that “if you believe in something, you should stick to it and not let others convince you of something different just because of the pressure.”
Gold and uranium
Moving over to the gold sector, Katusa asked Holmes his thoughts on the yellow metal.
“I think we will see a gradual climb in gold prices. The last blow took place in June with the GDXJ rebalancing and the market has not healed yet,” he explained, adding that it was interesting to see interest rates going up in the US but the dollar going down.
Katusa then asked Rule for his opinion on the uranium cycle, who answered that his suspicion was that “we’ve put the bottom in.”
“I will suggest your audience to adjust the timeframes they have in their minds with the timeframes that are needed for success,” he added, also commenting on Cameco’s recent production cut decision.
How to allocate your portfolio
When asked how they allocate assets in their portfolios, Holmes explained that he trusts when he gets “a feel for the stock.” He generally asks the question “do I get a feel for it?” before making any decision.
Meanwhile, Rule said that it depends on the function of the market and the circumstance. “When you take more risk and when your expectation is failure, you need to size your portfolio based on your tolerance to pain,” he added.
For his part, Casey commented that, due to the amount of suggestions from newsletter writers, investors should “own less stocks and monitor them more carefully.”
Top Stock Picks
Finally, Katusa asked each expert to share three stocks from companies that exhibited at the Silver and Gold summit this year that investors should learn more about.
Holmes mentioned Wheaton Precious Metals (TSX:WPM, NYSE:WPM), Equinox Gold, a combined business between Trek Mining (TSXV:TREK), NewCastle Gold (TSX:NCA) and Anfield Gold (TSXV:ANF) that is yet to be approved, and US Global Investors (NASDAQ:GROW).
Meanwhile, Rule mentioned Wheaton Precious Metals, Sprott Group of Companies (TSX:SII), Trek Mining, Torq Resources (TSXV:TORQ) and Orezone Gold (TSXV:ORE).
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.