Certainly there are more than five pieces of advice that I can offer newer investors, however, for the sake of brevity (and more posts in the future) i've distilled this post to 5 tips that rise above others in terms of their value and practical application for smaller investors. 

1. Don't use leverage. Just don't do it. The tendency is to always own too many shares of stocks that are in vicious downtrends and not enough shares of stocks that are breaking out. Leverage adds a dangerous element that can easily go wrong, especially for less experienced investors. 

2. Never go "all-in". I don't care how much due diligence or how much confidence one has in a company or its projects, this is the resource sector and all sorts of random variables can kill a company or its project. For a resource to become a fully operating mine not only requires a lot of things to go right on a micro level, but it also requires the macro backdrop to be favorable in order for a company to get project construction financing etc. 

There's way too many things that could go wrong for an investor to put all their eggs in one basket. However, the most aggressive investors could certainly allow a position that is "working" to become considerably overweighted in their portfolio as the share price appreciates. Just remember that most juniors suffer at least two 50% declines during their lifetime and the vast majority of projects do not become mines. As Eric Coffin likes to say "Mother Nature is just not that nice". 

3. If your investment thesis is based upon conspiracy theories and you constantly obsess over "the big boys trying to shake-out the weak hands" maybe it's time for you to take a step back and read some books, and better yet, reduce your position sizing. The market doesn't even know you exist and unless you're a hedge fund that owns 10%+ of a given stock I doubt the market makers or "big boys" are trying to gun for your stop loss orders. Junior resource shares are extremely volatile as a rule, so regardless of whatever your opinions are on a given stock you should expect volatility. The sheer volatility of this sector never ceases to amaze me, and it's most important to remind ourselves of this fact after a period of relative calm (similar to what we've just experienced). 

4. Seek out opinions different than your own. Confirmation bias is a killer cognitive bias that will cost us a lot of money over our investing lifetimes if we allow it to. If you can objectively refute a view that is opposite of your own then you're probably on to something, but if you can't then maybe it's time to trim your position. 

5. Don't always buy more just because the share price is lower. Stocks usually enter downtrends for good reasons and the market isn't as dumb as you might think. Before adding to a losing position one should engage in extra due diligence and also formulate a clear plan as to how much one is willing to risk. Constantly changing ones plan simply because a position is going against you is a great way to lose money. Be disciplined, be skeptical, and be risk averse. 


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