Behavioural Science @ Rare Earth Minerals!

P psychology

Think before you invest!

I’ve been trawling through the in-tray from last year [email in-tray}. One theme that keeps recurring is Investment strategy. Some are quite funny. One chap wrote that he woke up at 7am to a terrible noise coming from his garden, at the time he was having a dream about encore oil. In the dream he was chatting with a wizened old investor who kept telling him of the “black gold”, any way to cut a long story short he went to look out the window to find out what the hell this noise was and there on his lawn were 6 magpies fighting; instantly he thought “6 for gold!” then placed an order for EO. Happily he got them for 69p.   To be honest this kind of thing is more wide-spread than acknowledged. It’s like placing a bet on a horse because you like the name or the colour the odds are heavily weighted against you. It’s a disaster in the making.

There is NO Midas touch when it comes to investing but what you do need to have is a clear rationale when investigating/researching companies. It can become obsessive and emotional. In fact Behavioural finance , the psychology behind investing is now widely accepted and ALL financial houses,banks,funds etc study and employ behavioural finance techniques.

There are some very good articles online and I would urge investors to take an hour or two researching. The more one knows about how the market works and what pit-falls to avoid the less mistakes you’ll make. You’ll always make mistakes, we all do. It’s keeping them to a minimum that counts! Which brings me on nicely to a big mistake being made at the moment. What’s in a name? Well apparently about 1.30pence. Rare earth minerals have absolutely nothing other than a snazzy name (changed from Zest) yet the name conjures up feelings of potential wealth from???? Rare earth minerals! Lets ask a question. Zest failed miserably re’ the music business etc. What makes investors think that they are experts in mining or acquiring rare minerals? The psychology of this name is its only asset. Beware, investors are heading for a big fall.

Viva!

Daniel

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  1. Paul Neale says:

    Dan, can’t agree more. There was a company called SubseaResources some years ago. Told a great story of recovering precious metals from sunken ships. It sounded easy to make a fortune and many people lost a lot of money investing in a fantasy….maybe they just wanted to believe in recovery of treasure. As a peron who has worked offshore for 32 years I tried to get people to open their eyes and warned against investing in this company. It went to the wall some years later. No doubt the company directors earned handsome salaries throughout their “attempts” to get started. Beware of the dreamy companies!

  2. JB says:

    Nothing to do with mining experts Lenigas or Bruce Rowan taking large stakes in REM !

    Poor Dan, must try harder

    • Brokerman says:

      You are entitled to your opinion.

      Good Luck

      Daniel

    • Oil Stock Lover says:

      It’s the first thing I noticed when I checked REM’s latest RNS, was it was released by David Lenigas. Ok, he’s not done too badly over at Lonrho of late, so really not sure what weight to put behind him being over at REM. Either way, REM hadn’t crossed my path before today.

  3. Oil Stock Lover says:

    While I’m not invested in rare earth metals atm, it is an area I’d consider investing in. Tin and Indium are likely to increase in demand due to the requirement of them in producing Indium Tin Oxide for use in solar energy applications as ITO is a transparent material that can be coated on glass and is conductive.
    Uranium is another that is going to see demand grow (but more slowly, and is it even traded on the markets?) due to the need to replace hydrocarbon burning energy plants in the west so long as we can get the green lobby to shut up and realise the science.
    Other than this, its materials added to steel that of interest, such as manganese, as parts of the world industrialise and grow and therefore require new infrastructure and buildings. The problem is that this used to be driven by China’s growth imo, but I think I remember reading recently an article about China’s growth in terms of new buildings having decreased in the last year. The question is, is another country, e.g. india or maybe south america (although unlikely as much of it’s industry has been swipped by china) going to pick up the slack, or will China simple up its demand anyhow through increased exports due to its control of currency against the dollar.
    Oh, and lets not forget, if america does go south again, then the exports to america, one of the biggest importers, are likely to fall out of the floor with worldwide implications. But the chances of that in the next 10-20 years are slim now (I hope).
    One thing you can be sure of is that there will always be a market for gold, whether it be the shiny stuff, or the glorious black stuff.

  4. DocDaneeka says:

    Dan,
    With regards to advice to research shares/ companys and how the market works.
    Any advice on sources of info, books etc for a newbie to get started. I’ve been winging it on my own at so far trying to do some research to follow up on postings / tips from those few bb posters that seem to make sense and so far have done ok getting into EO at 13p and DPL at 3p (though also lost a bit on LGO my own fault for throwing caution to the wind) but would like to have the knowledge and confidence to do more detailed research and doing a bit of forward planning.

  5. Glen says:

    any words on XEL?

    • 13thMonkey says:

      I think “WTF is happening?” would be appropriate. Although that’s two words and an abbreviation.

      • 13thMonkey says:

        sorry, scratch that last comment- they’re recovering again. Just dropped 8.5% for no obvious reason, but back up again (almost).

        I’d expect that kind of behaviour from MTA, but I have to say XEL: I expect better of you.

        • Glen says:

          I nipped out for lunch for 15 mins and came back to 3.50 WTF was very much appropriate i nearly choked on my chicken sarnie.

          Market makers trying to create a bit of turnover maybe?

  6. stockbunny says:

    i never realised what happened to sub-sea after NOT buying it so thats interesting. was looking at REM last year but after the rise was doing more research. too many negatives so far so will watch with interest. met Lenigas in london…and didnt invest at that time either. sometimes i have missed a lot though as with EOG whilst deciding! I am waiting to ‘pounce’ on my next biggie, so many to look at thats the problem

  7. ABZ says:

    Hi Dan,
    Thanks for your article.
    I always read your blog. Last few days I am not in a mood to leave a reply cas thinking too much about my son and I am worried about him. He is only 2 but he has got Asthma. And Cough makes it worse. He cannt sleep at night.
    I will come back 100% again when my son gets better.
    We really appreciate your hard work for PI.
    Regards,
    ABZ

  8. ABZ says:

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    ABZ
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  9. bobbyshafto says:

    yeah man keep smoking the weed.

  10. Hey Dan I would just like to say thank you. Trp are on the rise too!

  11. Chad13451 says:

    Hi Dan, I cant find any post on CAZA from historical posts on your site. Did you ever do a piece on them? Considering buying in as they are drilling but just looking for any historical info.

    Ta

    • Brokerman says:

      Yes I did post on Caza when they were 20p. If the post or the comments section are not there it will have been deleted. Any post that remains unhit for 30 days automatically gets deleted. I’ll check for you.

      Dan

  12. ABZ says:

    Hi Dan,
    I tried to email you at info@brokermandaniel.com to give some feedback about your blog. But the email failed.
    What is the best way to contact you?
    Kind Regards,
    ABZ

  13. Chad13451 says:

    Thanks Dan.