David Erfle is a self-taught mining sector investor. He stumbled upon the mining sector in 2003 as he was looking to invest into a growing sector of the market. After researching the gains made from the 2001 bottom in the tiny gold and silver sector he became fascinated with this niche market. So much so that in 2005 he decided to sell his home and invest the entire proceeds from the sale into junior mining companies. When his account had tripled by September, 2007, he decided to quit his job as the Telecommunications Equipment Buyer at UCLA and make investing in this sector his full time job. He personally survived two bear markets, witnessed incredible sector changes and had to alter his investment philosophy numerous times in order to adapt to changing market conditions. 

MY PORTFOLIO PERFORMANCE

More details here

More details here

MY INVESTMENT PHILOSOPHY

                WHAT I BUY


I invest primarily into junior mining companies and devote all of my investment time and energy into this particular sector, so if you are looking for alternative investment opportunities, I suggest you look elsewhere. The portfolio in which you will be paying to view is basically my savings account. This is a cash account as I do not trade on margin. I will be selling shares periodically as I need to keep my living expense account up to date with at least six months of living expenses.

The initial goal of a junior miner purchase is a takeover by a major miner. I do extensive research on each company before I purchase it, as well as while I own it. All of the positions are either, growth oriented producers (low risk), developer/explorers (medium risk), or early stage exploration companies (high risk).

I do not invest in major mining companies. The bulk of the miners I invest in are developers/explorers and early stage exploration companies. However, I do own a few junior and/or mid-tier miner growth oriented producers as a lower risk anchor for the portfolio.


            BUYING STRATEGY


I rarely buy in “traunches” as I use basic technical analysis, valuation calculations, and extensive research before pinpointing an entry point. Timing is very important, as there have been many instances where I watched a company for years before making an investment.

I do not like to hold more than 30 miner positions as it becomes too difficult to keep track of any more than this number. I also like to limit company specific speculation to no more than 4% of my investment capital into any individual company. This is an extremely risky business so diversification is of the utmost importance.

I do not “front run”, which means I will send out an email informing subscribers of a new addition before I purchase shares. Many of the micro-cap juniors are very illiquid and my entry positions can range from $13,000.00 to $17,000.00, so I have limited my subscription base to 200 in order to avoid subscribers having to chase price.

             SELLING STRATEGY


It is far more rewarding to let your profits run at this point in the cycle for most junior miner speculation situations. You also pay less capital gains tax for positions sold more than one year from the purchase date.  However, I will occasionally sell a position if I feel it has run too far ahead of the sector and buy it back later if it becomes over-sold. I may also “switch-out” a weaker position with short term capital gains, or even a small loss, for what I consider to be a better spec play.

Risk management is the key to my success here so if anything I have purchased becomes a negative 20% position it is immediately sold with very few exceptions. However, if I decide to keep a position that has fallen 20% from my purchase price, I will most assuredly let you know why I have decided to keep it. I may even decide to add to the position, based on the circumstance of the sell-off.

Finally, just because I am selling a position may not necessarily mean I wish to sell, as much as it may be a personal necessity in order to replenish my living expense bank account.