David Morgan Interviewed by Ellis Martin on The Opportunity Show
October 15, 2009, Part 2
Ellis Martin: Now compared to how you trade in the speculative portion of your portfolio, you are probably not trading the top-tier companies as frequently, because they’re very cyclical in nature with regard to their stock price. They go up, they go down. Are you watching those carefully, buying and selling with the portion of your portfolio that’s dedicated to the top tier?
David Morgan: In the members section of my Web site there is a PDF file I wrote called, “How to Use The Morgan Report,” and on the top-tier cash-rich companies (some are not so cash rich now), those that make it into our model are basically buy and hold for the long term. These are solid investments that you should be able to buy and hold for the long term, as long as we still are in a bull market—and I believe that we are. Certainly they move around a great deal, as I previously indicated, and timing can play an important part, but if we are in a major bull market these stocks will do well. So these are ones you can buy and hold, and sleep at night.
On the speculative side, for a great deal of time we had a trailing stop loss on almost all of these stocks. When the credit crisis hit last year, it basically wiped out the speculative portfolio. At that time, no one saw it coming, at least to my knowledge. I forget how many stocks remained at that time—I always have ten or less, and I think there were around eight—I said if I had to pick the top eight speculations it would still be those eight. So we have held in there with these. Some have come back up, and we have recommended some new ones. We had one that went from $0.10 up to $0.50, and it’s made a round trip back to $0.10, unfortunately, but that’s the stock market for you—especially in these small companies.
A lot of my readers had the opportunity to cash out at a double, triple, quadruple, or even higher, and many of them did, especially the longer-term readers who know it’s my nature that, whenever we get a double on a stock that’s recommended on the speculative side, we normally sell at least half to recoup our initial investment.
Right now we’re holding what I think are some of the best juniors’ highest risk-to-reward profiles out there. In most cases these are producers and they do have a lot of upside from the aspect of the price of silver, which I believe will go higher over time. On top of that, most of them have exploration potential and they also have the ability to increase their production rate. So, because of all those reasons I think that these are rather “safe” speculations.
Mr. Martin: Since I’m a subscriber to your Web site, silver-investor.com, I know who these companies are.
Mr. Morgan: Yes, you do, because you’re a member. Otherwise, I try not to give them out, and there are a couple reasons for that. If I mention one, then others on the list will ask why I didn’t mention their company or why I seem to favor one over the other. The other thing is, I think that it’s a disservice to me to do that. Since I do a different model than most of the writers in this field, I think I should get paid for my research . . . and not just me—I do have people who work with me to do research. We usually visit the mining projects on foot. In nearly every case we’re actually physically there. We really try to carry out our due diligence and pass on our findings and opinions to our readers so they can make the final decision.
Mr. Martin: I noticed research reports, and you’ve got interviews with various presidents and spokespersons for some of these companies. There is quite a bit of information on the Web site. It’s a fantastic resource, silver-investor.com, and the subscription rate is very reasonable, isn’t it?
Mr. Morgan: Well absolutely. I don’t know anybody in the industry who goes to the length that we do to provide what we provide, for the cost that we ask. For instance, at the Silver Summit I interviewed every company that I could find that was on our speculative list. Only two were not interviewed; they had declined, only because there was nothing left to update since I had done that in Vancouver a few months previously. So, if you just get on the members portion of the Web site you can basically have a TV channel and watch me interviewing some of what I think are the best speculative investments. Although most of them are silver companies, by the way, there are other companies in there. I don’t know anyone who’s doing that on video for their members. Then of course we provide the written reports, the research reports, as well, and we’ve prepared some white papers. Also on our site, our subscribers can e-mail their questions to us and we usually address those. . . .
So you know, it’s a lot of work, but it’s my passion. And it’s a value I don’t think you can find anywhere else at the price that we ask.
Mr. Martin: I was watching one of the interviews with one of the companies that you like, and something you said really stuck with me. You didn’t want to hear about the company, you wanted to see what they did. “Show me, don’t tell me.” Those are the kinds of companies you tend to get excited about.
Mr. Morgan: Well that’s true, and thanks for bringing that up. I try to be as real as possible and certainly we’ve made some errors in the sector, as will any of us who take this kind of risk. It’s impossible not to. That’s why I like having just eight to ten companies in the speculations. If you do as I teach and you spread it out and you don’t focus on just one company that you might think has the best story because you don’t know they’re all speculations, you’re going to do quite well and really have little to complain about.
The problem is that every one of these stocks has a great story. But, show me don’t tell me. For instance, look at the uranium sector a couple of years ago: there were so many uranium companies out there but they were stock picks or promotions that you could buy stock in that had as much chance of finding uranium as discovering that the moon is made of green cheese. It was ridiculous. And that isn’t really my sector but I saw what was happening, so I had one of our associates write a very good paper on the uranium sector and I did a couple of radio shows trying to promote that. I was promoting just as a public service, because I knew a lot of people were heavily invested in the uranium sector and no one was telling the straight skinny on it, but we were. I wanted people in that sector to know that they could get an alternative view on it in our report. I thought it was worth their while to know that.
I received a lot of thank yous from a lot of people in that sector. Many people got very smart about how the sector was doing at that time and prevented themselves some really large losses. So, while we’re not perfect, we certainly do our best to be as objective as possible to help our readers. That’s who I work for. I work for the readers. I don’t work for any given mining company or other entity. I work for the people who read our reports.
Mr. Martin: Now you’ve written a book called, Get the Skinny on Silver Investing; can you tell us a little bit about that.
Mr. Morgan: Well I’m always looking for ways to grow the business and expand effectiveness. The idea that I should write a book had been floated by me many times, so I finally decided to do it. I found a publisher who was just getting started, doing kind of a take off of The Idiots Guide series. Their theme was “Get the Skinny” on a particular subject, and my subject was, obviously, silver investing. They had a very simple format and it was pretty easy to put the book together in a few months’ time, with just two regrets. It was to have been offered for sale at $19.95 but unfortunately was priced at $9.95—a little bit too cheap, I thought. The other problem that I had was with the editing that was to have been provided by the publisher but in fact did not occur. So in the final product there are punctuation, spelling, and other formatting errors that I would and could have fixed, had I known. I mean, my name’s on it so I’d like it to be as perfect as possible. Unfortunately, it’s not. But considering the price, and if you can overlook the style errors and that type of thing, it’s a very good primer on the silver market. For ten bucks you can read and learn a great deal on silver investing and decide whether it’s for you. I always stress education in any endeavor in life, and I think Get the Skinny on Silver Investing is a good way to spend an hour or so to find out about the silver market.
Mr. Martin: Where is the best place to get your book, David?
Mr. Morgan: The easiest place is probably the Internet. At silver-investor.com we have an electronic version you can download and read, or you can check Amazon, eBay, or other such sites.
Mr. Martin: David, once again thank you for joining me today on The Opportunity Show. It’s been a pleasure having you on the air.
Mr. Morgan: My pleasure. Thank you, Ellis.
David Morgan Interviewed by Ellis Martin on The Opportunity Show