I want to bring to your attention what a great stock market investment looks like. In this case, it’s a silver stock, and I chose this particular company for a reason—because it’s a great example of the ultimate “package” that an investor can hope to find in the huge universe known as the stock market. I’ve always found it a great exercise to review stock market winners of the past. That’s right; I like to look up stocks that I didn’t own that made a ton of money for those lucky shareholders who owned it at the right time.
You might think reviewing past stock market winners is a waste of your time, but I’m here to tell you that, without question, it isn’t. My logic for expending time doing this is the same why great baseball players watch reruns on television of important ballgames. It’s the same reason why pro golfers watch Masters Tournaments over and over. Even the pros learn by reviewing what worked for other people. In the financial markets, I like to review what worked in the stock market and all the factors that went into it (stock market sentiment at the time, corporate financial results, world events, trading volume, etc.) I can’t guarantee you’ll make money as a speculator in stocks, but I can guarantee you’ll improve your trading skills by reviewing previous stock market winners.
If you have the desire, pull up a five-year stock chart on Silver Wheaton Corp. (NYSE/SLW), which is up more than four times since April 2006. This company is worth over $16.0 billion now and Wall Street analysts continue to increase their earnings estimates.
I last wrote about this company in this column back in mid-February when it was around the $10.00 per share level. I wrote that Silver Wheaton should be a required case study at all business schools and that there shouldn’t be a speculative equity portfolio this year that didn’t include at least one silver stock. I maintain this view and it isn’t just because the spot price of silver has been so strong. Take a look at Silver Wheaton’s financial growth over the last three years and how the company executed its business plan. Then consider how well management has done in keeping the Street informed of its business developments and visibility for investors to bet on.
Silver Wheaton was one of those investment opportunities that offered the right “package” in my view. It was doing all the right things in the right industry at the right time. It was and continues to be a fortune-making equity security that’s worthy of study.
Successful stock picking is by its very nature a difficult endeavor to accomplish. When you’re not working at the management level of a company you’re thinking about investing in, you’ve got a lot of unknowns as an individual investor. And, even if your analysis and reasoning are 100% sound and it’s a bull market for stocks, your investment still might lose value because of extraneous events beyond your control. That’s the nature of the stock market. It’s a system of organized speculation about future corporate events.
In my view, if you want to be a good at the game of golf, you have to practice hard and learn what works for successful golfers. A similar analogy works in the equity speculation business. If you want to be a great stock-picker, then take the time to review a bunch of great stocks that made a ton of money. The process of reviewing past stock market winners will definitely hone your game.