Yikes! Bad Day for Uranium Stocks – Is the Bull Market Over?

by JDH on January 3, 2007

It was not a great day for uranium stock investors today. My portfolio was down around 4%, which is not great. Is the bull market over? Should we all sell?

One day does not a trend make, so I will postpone my mad panicking for a few more days yet, for a few reasons.

First, nothing goes up in a straight line. There are ups and downs, and while downs like today are not fun, they are a necessary part of the process.

Second, warm weather in Central and Eastern Canada and the U.S. has put downward pressure on the price of oil, and on all energy related stocks, including uranium stocks. This is temporary; winter will arrive eventually.

Third, virtually everyone who invested in uranium stocks in 2006 ended 2006 with lots of paper profits. No-one wanted to sell at the end of December, because there is no point in generating capital gains at the end of a tax year, so that you can pay taxes on those gains the following April. If you have gains and want to take some money off the table, you sell during the first week of January, so that you delay paying taxes on your gains for the maximum amount of time.

My guess is that while this down-tick may last for a few more days, we will probably look back on this week as a good buying opportunity. Perhaps that’s why we should never be fully invested. Having some cash available for days like this allows you to turn down days into buying opportunities. Perhaps being 98% invested wasn’t brilliant on my part. Oh well, it’s a good lesson for next time. I’d be interested in your thoughts for 2007; feel free to add them to the Forum on the 2007 Predictions board.

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fin January 3, 2007 at 8:01 pm

Bad day for sure, esp to be deeply invested (I am), but I merely gave up the tremendous gains from yesterday. Commodities and shakeouts go hand in hand–as do ugly corrections. So far, not too concerned. Trend is certainly still up, until proven otherwise

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