Markets keep falling but extreme value is starting to appear in stocks such as Los Cerros

We have seen the market hit a low in June, followed by a healthy rally that ran out of steam as many shares hit resistance levels. The subsequent falls have snuffed out any hope of a quick turnaround in fortunes, so it is still necessary to be careful. You can buy stocks that are hit particularly hard, hoping to trade out on a bounce, but the lower volumes often limit the opportunities. So, you still have to be careful in this bear market while many stocks are searching for the baseline.

One indictor that a company's share price is approaching its nadir is when it starts to approach its cash backing. Now that is not a guarantee that you will make money as an investor, as that company's funds may already be committed, but it can be a useful indicator of how much further the share price could fall in the near term. You then need to look at whether its assets are any good, and whether the shares have been too heavily discounted in the market of the day.

At one point, when the share price was 15c in November 2021, the market capitalisation of Los Cerros was nudging $100m. Now, with the share price at 2.7c on Friday, the market capitalisation of $17.5m. That is an 82% fall. The current cash balance is around $12.5m. 

 WeeklyComm1October2022.pdf