Brian Leni: It’s a Stock Picker’s Market and There’s More to Come

by birtanpublished on September 10, 2020

I'm charlotte macleod with the investing news network and here today with me is brian lenny founder of junior stock review thanks so much for being here online with me today thanks for having me charlotte

Yes okay so let's let's jump right into our questions we haven't actually had a chance to catch up for a while i think the last time we were speaking with you was at pdac

Which seems like a very long time ago at this point it does yeah so i did i did re-watch that interview and you actually said we might see a new all-time high in gold this year

Which we have so i'm going to start off by asking you what do you make of code's price activity should we get used to this kind of 1900 to 2000 range that we seem to be in uh i think unfortunately yes and

I say unfortunately because gold is a barometer of the the global financial system and what it's telling you right now in my view is that it's broken and uh you know for investors in the the resource space

Mainly in the gold market you know a high gold price is great because it helps your investments but the flip side to that is it does tell us kind of the world that we're living in now and there's a lot of

Question marks especially in the next you know three to six months in my view and uh yeah and that's and i i sort of you know i never knew when but i did see some calamity ahead

When we talked earlier this year yeah and i do appreciate that perspective of it's good for the companies it could be good for your investments but for the world as a whole it's it's not looking so good

And do you see do you see what's going on continuing we've had so much stimulus going on so much money printing and things like that do you see that continuing yeah you know the we've we've kind of

Been in disarray i think for the last 10 11 years now you know since the 2008 crisis and i don't really ever think we even though this thought the broader market had performed quite well um i don't think we ever got

Back to where we should have been it was all kind of unofficial with the qe and the low interest rates that were brought into us with the the first crisis in 2008. in this lead up you know the kovit really was

That camel that broke um the straw that both the camel's back and has precipitated all this and the effect of that lockdown you know we've destroyed segments of the

Economy that may never you know come back you know restaurants parts of hospitality tourism at least in the short term is going to be very affected and really we don't know

In the next let's say six to 12 months how that even looks so that those are big parts of the economy and i foresee those those parts you know still having problems in the future plus

You know we've got a second wave that could be upon us and that's kind of an overarching um negative uh you have the u.s presidential election which you know you really have a divided

Population um not only in the us but really worldwide this polarization between left and right and you know there's going to be a portion of the people that aren't happy regardless of how you look at it

Um so yes i do see some calamity ahead and i do don't think that the money printing is going to stop anytime soon and therefore i think we're going to see much higher gold prices ahead

Just as we look at this kind of macro picture i want to ask you about the base metals which usually you make some mention of from what i understand the future for base meadows

Hinges at least partially on stimulus packages related to infrastructure things like that are we seeing anything like that yet are there other factors to note in terms of the base

Metals uh in my view right now you know we're seeing spikes in copper zinc nickel tin i think a lot of these these spikes in the base metal prices are reflective of

What happened with the covet lockdown we had some not necessarily destruction of supply but some delays in the whole process and reductions of production um out of south america you

Know across north america and i think that's what you're seeing you know the system is having a hard time catching up with what i think is actually the demand has been maybe better than i would have

Guessed you know the gdp did shrink in the u.s by you know 32 percent uh in q2 but it looks like it's it's been a little bit better in q3 and the numbers have improved

You know all things considered um so we really we stand at an interesting point where um that demand i think is the the biggest component of whether it's going to be there in the future

Um and i think that that supply destruction or delay into supply has what is what has propped up the base metal prices to date okay so we've been talking about prices i think it's always good to start with a

Look at what's going on but i know for you you do try to be quite agnostic when it comes to factors like meadows prices you're trying to find companies and projects that can succeed no matter what the

Price environment might be so i wanted to ask you how has that been have you been able to stay the course during this this time of upward momentum especially in terms of gold and as a second part to that

Question is there ever a time when prices adjust higher that you might change what you're looking at and look at things that you wouldn't have

Considered before when prices were lower is there ever a time when you would adjust that um so yeah the my my general thesis like you said is to be agnostic to the metal and search in value and the reason i do

That is to protect my downside risk you know uh ever since i've been an investor one of the big things that i've learned that i have to protect my downside and that's the other thing i need to do

Is i need to control my emotion it doesn't mean eliminate emotion but it means to minimize it or control it and the way that i do that is i remain consistent in how i approach the market

Search for the value search for companies that are trading for less than their worth they've got a set of catalysts that will uh induce the market to recognize that value

And usually that one always you need good people to execute on that action plan and then of course they need access to cash and that is that is what allows me to be you know

Basically an investor full time um and i've been successful in the bull market and the bear market and uh and i know that's what will uh move me forward as uh you know having success the second part

To your question would i consider other you know sources or like trades or in the market yes but i'll take it from two different views as a newsletter writer

Um i'm sticking to the plan and i'm much more conservative when it comes to my my money and how i present it to my readers um so you'll see my process quite

Consistent on the other side of things um i do have a more speculative side to myself and i think the market is generally um open to that right now you know there's a lot of things that are moving

That may not have moved in the bear market and with my own money i'll take some of those chances and do some you know shorter term trades so

You know i think i can adapt with the market as it is on a small scale but on a grand scale i'm much better sticking to what i know and what has made me successful in the past

Okay that makes sense that's a good explanation speaking about stocks can you give me a sense of how your portfolio has been performing this year are there companies you're excited about uh wins

You'd like to share sure um yeah there's a lot to be excited about um it's actually been probably the most profitable six months in my life um and it

Again it goes back to your the question you just asked and it's that process that has really led me there um one of the big wins this year at its high when it was trading around 50 cents was albert plata

That's a 1300 percent gain so a 13 beggar my first 13 bagger and um there's many reasons i went into that but that was a very good success um i added 12 new picks to the premium

Junior soccer premium portfolio and the average was around 80 return on each of those and again you know it's it's you got to find the right companies out there i think it is a

Stock pickers market but you know the market is with us and uh if you make those good picks you're being paid for it and uh i think there's there's more to come especially on the

Expiration side where the market seems to be very excited and they pay for discovery right and what would you like to see the companies you follow doing in this environment should it be

Full speed ahead in most cases or even all cases perhaps yeah it depends it depends uh what full speed ahead actually fully means but what i would say is this yes i think

You know they need to put their money to work um you need to have multiple well again it depends on your situation but if you have the money um and you have the drill program and

You're doing an iterative process um where in the bear market things may have been stretched out a bit i think it i want to see things moving as fast as they can um to take advantage of this because the

Side note to this is you know the bull market won't last forever and uh i think the the companies do need to take advantage of it while they can and uh yes so the general

Sense yes i do think they should be full steam ahead okay so overall i want to ask you how you think coven 19 has affected the mining space my my impression is that most companies

Actually weren't slowed down as much as people thought they might be when we first started seeing mine shutdowns exploration programs slowing down

But now especially as we have q2 results coming in and things like that what is your sense of what the impact has been well yeah i guess it depends on the type of company yeah totally

Yeah so if you look at especially the base metals i know like i we were talking about earlier i think there's uh an absolute you know clear impact to the bottom line of the the supply

And this is to a lot of the you know um you know in chile with s candida you know the the shutting down or reducer production on escandida affects the copper market very much it's the largest producer in

The world um and therefore you know whatever it does it has a big effect so i think you know it wasn't ubiquitous across the sector i think like you you mentioned

It really depended what type of company it was and some of the exploration companies that have you know uh projects that are up north they weren't exploring in the early

Spring anyways you know the yukon alaska or parts of alaska any northern canada really didn't open up until probably may and that's when we were coming out of you know that phase one

At least in canada and so i think you're right i think for a lot of companies it really wasn't that huge impact um and you know one of the things i think was important the companies that didn't see as much of a slowdown were

The ones that were cashed up going into the the covid of course they didn't know but i think they had an advantage you know to hit the ground running once the uh the lockdown was

Was taken off okay on a similar note i think what challenges are you facing as an investor in the current environment if any it sounds like things are going pretty well

But i i think a lot of people have gotten very familiar with the struggles of investing during tough times but now the outlook is more positive i wonder if there's anything any challenges that have come

Up sure you know while the bear market is maybe predicated more on fear the bull market is greed and absolutely it's something that i try to stay mindful of all the time

Greed you know i guess is what motivates a lot of us to to invest in these speculative stocks and a lot makes you take these risks but it can hurt you

Um there is a time to sell and you need in my view you need to be selling along the way to reduce your risk protecting your downside risk allows you to deal with corrections like we're having in the market today

And have less emotion of you know what what to do instead you know i if you've been clipping all the way along you have that cash position um that's ready to deploy when the

Market corrects and comes back to you and you can take advantage of that whereas if you haven't sold anything and you're sitting on let's say 200 gain and you start to see that eroded chances are i i i'm taking a guess here

Is that a lot of investors you know they get the 200 it comes back down 50 and they sell they sell a portion of it um and then they don't know how to get back in on the other side when the

Market does turn um so it's always that struggle with emotion and you know that kind of pendulum between fear and greed and uh if you can get it right you can be

Very very successful okay just on that note can the average person be doing this like it sounds like obviously you put in a lot of time into what you're doing and you know can people who are

Sitting at home do what realistically how much time should they be spending on things like this to be successful that's a really good question um what i what i would say is this is you

You need to find first what your risk tolerance is if you can stay within the bounds of where what your risk tolerance is i think that's probably about 50 of the battle so what that means is

You know do you stick with the producers who are producers and royalty companies that are at that lower end of the spectrum of risk whereas the explorers are at the very

High end you're either going to hit it or you're going to lose it so if you can find where you in on that where you your risk lays on that scale and stick to it then i think you have a better chance of

Maintaining emotion and then the second half to this has to come with actually picking which company to invest in and that's going to take a concerted effort on everybody's part you know to

Do the research to be a successful investor especially in the the junior resource sector you need to have knowledge on a broad range of topics you know a little bit of accounting a little bit

Of geology um maybe the the insight and just how capital markets work and and how the stock price moves but you know what i i learned i was self-taught essentially i've had some

Very good mentors that i owe a lot to um but if you're if you're diligent in your uh research and educating yourself and learning from the experience of

Trading in this sector you can be successful and but it's going to take some effort okay one other just as we're wrapping up one question i have is are you seeing any issues in

The mining space right now that are maybe being overlooked um either due to coven 19 which is really weighed on the space this year or due to there's a lot of exuberance on what's going on in gold

Are there things that we might be missing that's a good question and you know honestly that's something i've been sort of thinking because i i want to make sure that i'm not missing anything

Because you can be very defined in how you view something and uh i think it's important to try to see what the other view is and maybe that's it uh maybe it's exactly that you know

Like you said there isn't exuberance the goal thesis in my view seems very straightforward but you know maybe there is something on the other side that could be that component that we're missing to see why

Maybe it's there's a hole in it um and that's that's what i would say and that that's always you know kind of links back is you can be said in your view and how things are

But you need to look at that opposing view or find an opposing view because it's got to be out there and answering that you know should keep you leveled you know in the middle of that

That plane between fear and greed where you're you can take money off the table you're not afraid to put it out there into an investment um and you stay you know consistent in your your approach

Yeah and i do ask people i i've been asking quite frequently you know is there something that could not gold off the track that it's on right now so far i haven't really gotten a yes

Answer on that but then again i do spend a lot of time talking to people who are very positive on gold so it really can be about finding that opposing viewpoint that might not be within

Who you're talking to usually i think absolutely absolutely yeah um okay well as we finish up i wondered if there are any final thoughts or words of advice that you would share

With people right now um kind of what our discussion has been about you know stick to your knitting uh be patient with the market uh remember to buy when people are selling so in those days when you see your board

Or your watch list is red those are the days of deploying cash vice versa when the your board is green and it feels like the thing is never going to stop going up that is when you need to sell if you can

Get that mentality correct um i think you'll be well ahead of the crowd and you'll be able to profit in this what i think is going to be a very good gold blue market okay well that seems like a great note

To end on thanks so much for being here to talk about what's going on in the mining space thank you very much for having me charlie thanks once again i'm charlotte macleod with the investing news network and this

Is brian lenny with junior stock review you

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