I had the opportunity to attend a presentation by a private investor called Chen Lin at a Gold and Resource Conference yesterday. Chen Lin has a pretty remarkable track record as shown by the performance of his wife’s portfolio which was managed by him.
Chen Lin specialises in investing into resources stocks. During yesterday’s session, he shares with us his tips of investing. Here are some of them:
- If a resource price has peaked, it doesn’t really matter how you picked stocks in that sector. All of them will come down. Therefore, it is better to sell all of them and run as soon as that happens.
- Look for long term trends and buy undervalued stocks in that sector.
- Look out for a sharp rise of prices caused by a short squeeze. If the company collapses, you can ride the reverse position.
- If a story gets a lot of coverage in the media, it is also a good time to run.
- In a bull market, look for high cost producers as the margins will increase significantly.
- In a bear market, look for low cost producers.
- It is never too late to buy after the first major discovery as there might still be plenty of upside.
- Plan your exit strategy before buying.