Let’s do a quick quiz. If you receive a mailing or see an online endorsement for some investment, if Warren Buffett and Jeff Bezos are mentioned, then you should follow the advice in the endorsement. How about if Elon Musk is mentioned? The answer is: perhaps, but probably not.
When I received the January 2021 issue of “Investing Today”, the first thing I did was to look through the 14 pages to find the fine print. The fine print tells an important story. In essence, the newspaper was an advertisement for one company: American Lithium Corporation (LIACF). With that information in mind, I read the articles and suggestions. Of course, big names like BBM (Buffett, Bezos, and Musk) make the newspaper seem reputable and trustworthy.
The Next Step is a Lithium Watchlist
My Seeking Alpha subscription is my next stop. I created a new watchlist and entered the ticker symbols of the lithium stocks shown in the Investing Today article. Those included MLNLF, LIACF, PILBF, GALXF, SQM, LTHM, ALB, PLL, and OROCF. I then Googled “Lithium ETFs” to find ETF’s with their ticker symbols: BATT, LIT, and REMX. There are others, but I stopped at three. A quick look at the results helped me see that all of them were high-risk investments. However, if I were going to buy a lithium-focused stock or ETF, I would focus on ALB as the stock and I would probably prefer LIT as the ETF. LIT has 48 holdings, and their largest holding is ALB.
What Comes Next?
To see if I already have any investments in ALB, I went to the free ETFCHANNEL web page and entered “ALB” to see which ETFs hold that company stock. Many do, and even DGRO has a small slice of ALB. However, none of our holdings are focused on lithium. Therefore, adding a lithium-focused investment has some appeal. I would probably buy ALB because they pay a dividend and have a reasonable dividend payout ratio and a 26-year history of increasing their dividend. The yield is paltry, but ALB might be a good growth opportunity. I would only buy on a pullback, as ALB’s P/E ratio seems ridiculous for an older company.
Summary for Tortoise Investors
My primary objective in writing this was educational. Do not focus on lithium or any other metal that is hyped in the media. Be even more skeptical of gold, silver, copper, and bitcoin proponents. When you invest like a tortoise you will generally beat the hare in the long-term race.
Cindie and I do not currently own any Lithium stocks or ETFs.