Anatomy of a “10 Bagger”

Mining stock traders more than any others refer to the term “10 Bagger”. Its just a reference to how many multiples of their investment were gained on the trade. We currently hold two junior miners in our portfolio that are well on their way to being 10 baggers, one (MGMLF) is already up 300% since our purchase earlier this year, the other (MXROF) is up 160% so far. As always, verify for yourself our holdings, entry and exit prices, etc in our account statements posted elsewhere on the site. Its not just the absolute gains they have already made, its the fact they have done this in the middle of a correction, where many junior miners have pulled back 50% off their July highs. This is extremely bullish action, and bodes very well for when the group turns higher and resumes it’s bull again.

Let’s take a look at MGMLF…

That vertical run was only the result of Agnico Eagle taking a larger stake in Maple Gold, and getting deeper into a serious partnership, where AEM (Agnico) has not only agreed to invest in drilling and exploration at Maple’s discretion, but also contributed some properties to the joint effort, giving Maple the rights to explore AEM’s property, and they can share in the discoveries that will be made there.

Whatever the catalyst to get a stock moving like this, while necessary, the real key to netting a 10 bagger is to STAY IN THE WINNERS! We can’t cash out after every decent run, or we will leave lots of money table, especially over the course of one’s career where they might have several potentially life changing trades, if only they knew ahead of time and could stay in the trade.

So how do I know when to cash out, its easy to just say stay in forever, but riding a winner back down to zero won’t make you rich, either. I will use my regular exit strategies, and will sell MGMLF not only after the stock makes a big run, but also when it runs higher with the group. These two miners have been going higher in the face of a correction where many similar names have dropped 50% after a big run this year. This tells me they want to fly further, given a good backdrop where the miners have positive attention form investors. So, I will sell when not only these miners get to overbought, but the group is overbought at well. Will MGMLF be a 10 bagger, only 5 bagger, or it could even be a 20 bagger, we will let the market decide, but for sure getting out after “just” a 300% gain would be a mistake. To change our financial futures in a major way, we must press winning positions and stay in for our full signal, resisting temptations to cash out and take the quick money that seems big right now, but might be multiples of that not to far in the future. This allows the power of compounding to kick in and work in our favor, but that will be a discussion for another day.

Before we wrap up, lets take a quick peek at MXROF, too.

This one might even be up closer to 200%, I haven’t checked the exact prices but it doesn’t matter, the principle is the same, we must push our winner positions. Both of these holdings have tempted me to cash out several times already, but each time I was happier a short while later that I held on. The bigger the unrealized gains, the stronger your hand, making it easier to ride through corrections and press for even more. It’s hard enough to find big winners, but the magic in growing our investment accounts stems from letting winners give you all that they have to offer. You will often be surprised just how correct you can be!