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The Gold Insurance Bet – The Day My Life Changed Forever

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July 6, 2018

The absurdity of it all kept my mind off what was about to happen to me.

Six years ago, my life changed forever.

In late May of 2012, at the age of 33, I had a heart attack and emergency quadruple bypass surgery. 

And I learned that Discipline = Success, in all aspects of life. Not just investing.

And today, I want to share a few lessons I have learned from personal experience.

I’ve traveled to over 100 countries, including hundreds of site trips, hotels, and flights.  

Along the way, I actually lost track of what mattered in life. Early in my career, I started out with a financial goal in mind.

I hit that number sooner than I planned, so I went and wrote a new number – not basing it on any real logic, but mainly to see whether or not I could achieve it.

I was more than willing to put in the hard work, long hours and personal sacrifice, and I quickly found the journey more enjoyable than the destination.

I hit my revised goal and kept rolling. Then the global financial crisis of late 2008 hit full force. I, alongside my subscribers, watched our portfolios get crushed.

After that dreadful year, the resource sector came roaring back from 2009-2011, which were great years for the portfolio. But everything changed for me the day I was rushed into emergency heart surgery.

I share this story only because there is what I consider to be an important lesson or two in it.

Lesson 1: Listen to your body

My career is based on being on the road, analyzing and looking for the next big score.  But when I started having chest pains combined with an odd tingling running down my left arm and pain in my jaw and teeth, I knew something was wrong.

I rushed to the hospital emergency room.

Lesson 2: If the first answer to your question doesn’t sound right (or logical), ask for a second or third opinion until you are satisfied

Call this the “Gut Confirmation Bias”.

After I explained my condition, a nurse assured me I was just having anxiety, and she advised me to go home and take the prescribed anxiety medication. Based on my age and physical condition, she was certain that at worst, I was having a panic attack.

Panic attack?

Anxiety?

My gut told me that wasn’t it.

I knew it had to be something else. I requested more tests. The doctor still didn’t feel it was anything more than anxiety, and again I got the advice to just go home.

But I knew something was wrong.

I refused to leave the hospital until I saw a cardiologist. Makes sense, right?  I was having heart pains; I didn’t want to listen to a nurse or a GP. 

My amazing wife stood by me the whole time in full support, and that made a world of difference. I am a blessed individual.

Now, this is where the story gets interesting.

When I finally got to see a cardiologist, he (again) said I was suffering from anxiety and that I should go home and rest.

I requested an angiogram and he finally, reluctantly, agreed to run some tests if I promised to leave right after.

By that time I had invested 40 hours in the whole ordeal. And the pain wasn’t any better.

The Gold Coin Insurance Bet

While I was waiting for an angiogram, the cardiologist said he guaranteed nothing was wrong with me.

Well, I liked the odds… So I bet him a gold coin that he was wrong.

Five minutes into the angiogram, the cardiologist screamed for a nurse to get the surgeon immediately. I asked him what was going on. That was when he said to me: “I am sorry. You need emergency triple bypass open-heart surgery right now.” 

It was the first time that my life literally flashed before my eyes, and I realized I’d been wrong all these years.

During this ordeal, not once did I think about my money and success.

All I could think of were things I hadn’t done with my wife and loved ones.

I started to think about all the things I now realized I wanted to do. I thought to myself, if I only get one more chance, I am going to change what I have done up to this point.

As I was being wheeled into surgery, one of the nurses recognized me. During the surgery prep, she and the surgeons started asking me questions about the stocks in their portfolios.

I didn’t mind, actually – the absurdity of it all kept my mind off what was about to happen to me, and what might happen.

Maybe that’s what they had in mind.

I told the cardiologist that he didn’t need to pay me the gold coin if I came out alive, and then my last thought as the gas hit me was, “One more chance, and I’ll…”

The situation inside my chest cavity was worse than what the angiogram had indicated: I needed a quadruple instead of a triple bypass.

The cardiologist who performed my surgery told my wife and I that he couldn’t believe my heart was still ticking. I wouldn’t have lasted another week before a massive heart attack would have taken me out, due to all the blockages in my major arteries, he said.

The main reason I write this personal experience is to reinforce the idea that you know yourself and your body better than anyone else – even doctors.

If you aren’t getting answers you feel are right or the service you require, don’t be passive and just accept it. Request a second opinion. Go somewhere else. This applies not just in health, but in all aspects of life.

Persistence often does pay off.

Lesson 3: Re-evaluate your goals

The third point of this story is goal-setting.

What I neglected to do when I wrote down my financial goals was to include all my other goals in life – my health goals, exercise goals, charity goals, personal goals, and family goals, among others. Don’t forget about what really matters in life: a balanced portfolio of family and friends. And hell, I will also include work and money, because I love what I do, and all of these are important to me.

So here I am, six years later. What can I add?

Well, it’s time I re-evaluate, again, my own framework for investing/speculating and my own personal life.

Lesson 4Cut ties with the anchors

If any stock in your portfolio is causing you stress, you either own too much and should sell some or all of it, or speculation and this style of investing isn’t for you. There is nothing wrong with trying investing and, after giving it a fair try, admitting it’s not for you. But I do believe the most prudent and successful way to succeed in speculating/investing in the cyclical resource sector is the way I am personally trying to go about it.

Discipline = Success in resource markets and in all aspects of life.

Lesson 5: Tranche buying matrix

I spent the first 10 years of my career learning how to pick stocks (and even at that, I will continue to make mistakes). 

After hundreds of site visits and mistakes and successes on both the technical and financial side, I’ve found a framework that works for me. Almost as important as my due diligence framework is my framework on how I buy the stock and when and how to sell.

For one, you should never load up 100% of your desired position into any one-buy order. I have given many examples of this in the past. Perhaps there are other fund managers and newsletter writers who have a mystic ability to buy only once and be set. But I have found (through direct experience) that the best results have been from buying in tranches. To keep things simple in my newsletter I have used four tranches, with each being 25% of my desired allocation with specific price guidance for each tranche.

If the stock takes off like a rocket, I have skin in the game.

If the stock retreats to a level I deem discounted to its intrinsic value, then I add to my position by taking my next tranche.

Junior stocks can make wild moves when a big player buys or sells a chunk of stock in the open market. For me, it makes sense to buy in tranches instead of timing and moving the stock price.

Lesson 6: Position size

Never put more than 10% of the speculative portion of your portfolio into any one stock. I emphasize speculative portfolio, which means not the money you need to pay your mortgage, send your kids to school, and feed your family with. Better put, don’t speculate with any money that will affect your lifestyle and keep you from sleeping at night.

I haven’t always followed this rule. And I believe everyone who speculates will come across this dilemma when they feel compelled by an opportunity. If you haven’t yet, your time will come and you need to recognize that it’s happening.

All I can say is to make sure the speculation doesn’t blow up your portfolio. 

Readers and subscribers often ask me about my cash position (attack capital). Right now I am a little above 65% cash. Of that cash, I am about 60% in Canadian Dollars and 40% U.S. Dollars. 

Being Canadian, living in Canada, paying taxes in Canada, and speculating/investing in mainly Canadian listed stocks is the reason for the 60% weighting in the Canadian dollar. I continue to believe the U.S. dollar will outperform the Canadian dollar this year.

Lesson 7: Remember the Way of the Alligator

I like to put my money to work as much as anyone else, and sometimes impatience can get the best of you.

That’s why I always recall The Way of the Alligator. If you’re impatient and you’re always “doing something,” you won’t have the cash to buy up bargains during a crash. When you look at your cash positions as big returns in waiting, you’ll start to realize how powerful the alligator buying system is after one or two big hits.

In recent issues of my paid research letter, Katusa’s Resource Opportunities, I made the case for the potential overall market vulnerability. I talked about how it would affect the resource sector if that event occurred. And contrary to what many gold cheerleaders will tell you, all asset classes can be hit including gold and gold stocks.

I believe that the case is still valid and maintain a level of cash to stalk my favorite stocks (that I place on a watch list). My current conclusion is that I want to only own core positions in companies that I believe will appreciate well over the next 3-5 years.

I want to be flush with cash to redeploy if a major market correction happens. Then the alligator will be ready to prey on the best companies in the resource sector at discount prices.

These are companies that I am willing to increase my position in during a major market sell-off. And also stocks I’m willing to buy shares in companies that I think will be bought out in 2018.

And stock buyouts are picking up…

You may have heard how Orion Mine Finance (private equity) bought Dalradian Resources (DNA.TO) a couple of weeks ago. This was the third company to be bought out on Katusa Research’s Gold Buyout – Market Intelligence page.

Of the four takeout candidates in our paid members portfolio, two have already been taken down for a big gain and I believe the remaining two will be bought out by year-end. That is why in the next issue we are writing up the next batch of companies that I believe will be taken out.

Right now, my team and I are going through a large matrix of potential gold, copper and base metal stock acquisitions that large caps could takeover and juice their balance sheets with. And we will be breaking them down to the likely ones that will happen in the pages of Katusa’s Resource Opportunities.

2018 could indeed continue strong as the “Year of the Buyout”.

Regards,

Marin Katusa

P.S. My team and I recently put together a special report called, Blockbuster Buyouts: 300% Gains from the Best Gold and Oil Juniors of 2018”. In it, we break down the analysis that makes two junior stocks excellent candidates to be taken over by a major.

I outlined my investment thesis for Nevsun, and we made a big score. Same goes for Alterra Power, and we made a big score (up 167% overall). Now, I’m putting my money where my mouth is with these two picks – and I believe they could get bought out before the end of the year. To get immediate access to this report and a year of my research with Katusa’s Resource Opportunitiesclick here.

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