Given the PGM Price Volatility and the Covid-19 situation, should I sell my Cats now or hold onto them?

Given the PGM Price Volatility and the Covid-19 situation, should I sell my Cats now or hold onto them?

MB:
Given all the volatility in the scrap market and the Covid-19 situation, what should I do with my cats now? Should I sell them or hold onto them?
SV:

This is a question we have recently received a lot.

The essence of the question is: “Do I sell now – or do you think prices are going up and I should wait for a better price?”

Our answer has always been the same:

Are you a Business Person or are you a Gambler?

MB:
What is the difference?
SV:

A Business Person has a process that feeds them data and they convert this data into knowledge – and that knowledge guides them to make better decisions, such as when it is time to sell, when it is time to hold, and what to do during an unexpected or major event.

A Gambler, on the other hand, relies on “gut-feel”, ‘rumor’ and ‘anecdotal stories’ to make decisions based on what they “feel” they should do.

MB:
Is one better than the other?
CG:

I would say they are two different ways to make decisions.

With the Gambler approach, you regularly experience the thrill of victory and the agony of defeat. To use a baseball analogy, this approach is similar to “swinging for the fences” and results in either a Home Run or a Strike Out.

The Businessperson, by using a process to make decisions, has minimal feelings of doubt, anxiety, or second-guessing. Their process guides them on what to do – and they just follow the process. Staying with the baseball analogy, this approach doesn’t yield a lot of Home Runs, but there are also not a lot of Strike Outs.

I would add, that the Businessperson approach lends itself to making smarter/more accurate economic decisions over the long-term.

MB:
Why is that? (And... What does that mean?)
SV:

From an economic standpoint, it is very hard to be a good Gambler. Being a good Gambler often requires that you bet against the crowd and this is, emotionally, a very hard thing to do. It is difficult to go “left” when everyone around you is going “right”. The social peer pressure of following the crowd is almost impossible to resist. This is why most people buy stocks when they are at their highs and sell them when they are at their lows.

MB:
I get that having a process for selling is important. What did you mean by a major event?
SV:

A “major event” is an event that fundamentally alters our normal course of business. It would include an event like we are experiencing with Covid-19 or the recent 80% in 3 days decline in Rhodium prices. (Rhodium is one of the precious metals in the converters.)

Major events are almost impossible to prepare for. However, if you have a good process in place, it helps you keep calm while others around you are panicking.

MB:
Got it.
CG:

By the way, if a Seller wants to be a Gambler, that is certainly their right. The only comment we would make to Gamblers is that hoarding scrap converters as a way to speculate in the precious metal markets is not the best way to play the precious metal market. Using actual catalytic converters to speculate in precious metal prices is like buying a semi-truck (tanker) of gas because you think gas prices are going up.

A simpler way to gamble on that would be to buy Exxon stock or oil futures. This allows you to gamble, but it doesn’t require you to pay storage fees, will not be stolen from you, and it is easy to sell when you are ready to liquidate.

MB:
What is the one thing you think ALL Sellers, whether they are business people or Gamblers should know about selling converters – but few of them actually know?
We Do NOT Buy. We Do NOT Sell.
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