Stock Trading - Entry 20

Alright, enough with blockchain mining. This article focuses on a different set of questions. What's my (current) stock trading strategy? What did I see with my stocks in the first quarter of 2024? Did I find any interesting stocks while window shopping for some? What is royalty financing? What is a sure-fire way for me to earn money on insurance this year?

The analysis I perform when deciding on whether or not to invest in a given stock can be divided into numbers and not-numbers.

When it comes to numbers, I look at the following:

• current stock price (see entry 3)
• floor of the stock price (see entry 4)
• number of stocks traded in recent months (see entry 4)
• product margins (see entry 14)
• how long the stock has been listed on an exchange

(That last one is new and I discuss it a little later in this article.)

Looking at these sparks questions around what may or may not be realistic in my expectations of where a stock's price will go.

In other words, numbers need context. Here are the non-number things I look at:

• size of potential market
• who buys it?
• would I buy it? (if applicable)
• how long can sales continue?
• when sales are expected to takeoff
• what the company is investing their money into
• what the C-suite is up to

I have thusfar written about companies whose market will decrease due to government policies, another company using the company in question for its own purposes, and playing the long game. In my window shopping for stocks, I stumbled across one I would like to point out here.

There's a company called Microbix, who develops some pretty funky cosmetic products. From what I gathered, Microbix sells patents to a company in France who then distributes it and pays royalties to Microbix. Pretty solid model with large customer base and government cooperation. The question now was, could I as an investor get in on that?

Well, consider that, as of the publishing of this article, over 80% of shareholders are internal. That means they are using stock options to incentivize employees above and beyond salaries. Combining that with dismal stock price fluctuations over the past thirty years means investing in that likely wouldn't work for me because I don't work there. Newsflash #14: Just because a stock is listed on an exchange doesn't mean it's for investors to buy. This raises the question of how could I as an investor get in on royalty deals?

One thing I have had in the back of my mind since entry 5 are stocks paying dividends, but they don't seem to come cheap since they have yet to appear in any of my searches. One company with an interestingly similar model of giving money to its investors did crop up on one of my searches, RE Royalties (RE). They neither have a stock that pays dividends nor do they loan money to other companies from which they collect interest. According to this article, they do royalty financing. Basically, investors pony up cash so that RE can enable a company with a product or service that needs financing to take on significant deals. RE then collects royalties - percentages of what that company then makes on those deals.

This needs to be done in sizeable chunks, so RE has to operate with a significant pool of cash to do royalty financing. When they find a company with a great, new idea that RE thinks can go places, RE provides funding to a company in exchange for obtaining a percentage of royalties, some of which are paid back to investors. In short, investors pony up cash in exchange for a cut of royalties. That's their circle of life (so to speak).

While the concept seems great, I can't help but notice how their stock price has consistently been on a downward trend (as of the publishing of this article). As an investor, I would need to know more about how their royalty financing deals make investors money because their stock doesn't seem to. Since I don't have anywhere near enough to invest in something like this, I will chalk this up to a question for rich investors.

I do intend to become a rich investor, which was reinforced when some of my notifications sounded. The stock price for Progressive Planet Solutions hit 12 cents per share, a 33% increase after only one month since purchase! Also, Braille Energy Solutions hit 15 cents per share, an increase of 3x (300%) in five months! And if you are still wondering, I am still earning some money on the side from stock lending.

Whether or not to hold on to those two stocks is a question I am wondering in this quarterly review. To be honest, both still hold promise and I haven't found anything else just yet to invest in. So, for now, I will hold. One thing I want to learn from reflecting on multiple stocks over time is key indicators for selling - not just buying. At the absolute least, I can now make some money whenever I sell these two stocks, which is exactly the position I want to be in.

As for the other stocks in my portfolio, mixed bag of nuts and for most it's too early to tell. I have to admit that speculation on real mining, not blockchain mining, is something I will likely limit in future. Low prices with tons of uncertainty. I have decided to keep minerals a low percentage of my portfolio unless I find dirt that is guaranteed to pay! Who doesn't like stumbling onto such things after all?

With upcoming expenses in my personal life, I have decided to do two things to guarantee some more money to come my way.

One thing I did was invest in a tax-free securities fund. It's comprised of bank notes and government bonds (where do you think the Covid money came from and the resulting inflation?). Those are very safe and I can pull my money out within a week if I need to. I invested in this to add to the basis of comparison I am setting up for myself.

The very big question I have for my first two years of my stock trading journey (which I am now 5 months into) has to do with where my effort should go. You know, the 80-20 rule. Now I have a super-safe fund, a market-linked fund (see entry 2), and a general fund all with the same initial investment. Which of those three should I keep after two years?

Then, I will look at my stock trading in general and find out which parts of my analysis have the greatest impact on my investment returns and whether or not my effort is worth it compared to those three funds. Don't get me wrong, I enjoy writing, but if the time I spend stock shopping and analysis gets me little more in comparison to those funds....

For now though, I want to increase the amount I can invest without tapping into the income from my salary over the next few months, which leads me to the second thing I did. A few years ago, my wife and I got some critical illness and life insurance, which we have decided to keep. So far, I have been paying monthly. As it turns out, that is an expensive way to do it.

When I asked, I found out I could save about 10% if I paid the money all up front. That means I can save $200 per year if I pay annually instead of monthly. That's a free $200 every year I can invest.

Given how early I am in my stock trading journey and the $360 I started with, this is a significant enough boost to warrant a temporary shift in focus. Over the next few months, I will sock away a little along with my tax refund (when it comes in) to cover the full annual premium when it comes due this autumn.

It should be noted that I now have a decent full-time job and if it was a lot less decent, I must admit, I would be investing in my skills since those would have a higher payoff than stocks. Better skills got me a higher income, a portion of which I can use to buy stocks. Newsflash #15: Stocks can only multiply a portion of one's income. Multiply. A portion.

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