I have once again got back into CXX.V – Crosshair Exploration & Mining Corp. This was originally a play on The Dines Letter recommending the stock, since in one issue, many months ago, Mr. Dines showed a chart of the stock, but then never recommended it. It rose on speculation that he liked it, but then faded back when he never did recommend it.
As I reported on December 30, 2006, I sold my shares at $4.00 on December 11, 2006 because it was looking like a peak had been reached. It turned out I was exactly correct (which means either I’m brilliant, or very lucky). I think the Crosshair chart at that time is very instructive. I liked the stock, whether or not Dines is recommending it, so I’ve been looking for a chance to get back in. This week was that chance, and this week I started buying around $3.20. Why? Because the chart looks good:
It appears that the bottom happened around $2.50, and a base has been built for further advancement. I also like the fact that the MACD looks good, and the RSI is just crossing over the 50 level, which traditionally is a good buy point. Also, many of the other uranium stocks have had large gains recently, so it’s time to put some money in stocks with a greater chance for advancement. I’ve put 1% of the portfolio in this one, and plan to place some below market orders to get my holdings up around the 2% level.
{ 2 comments… read them below or add one }
JDH –
While I appreciate your careful and measured approach to investing, I have a question regarding your strategy.
If you believe in the fundamentals for uranium and envision another year or two of possible growth in your stocks, do you really want to be out of quality stocks such as FRG at any time? If you believe that there will be more mergers, acquisitions and consolidations in the industry, why take the risk on being on the sidelines if something were to occur?
Have you had success in redeploying capital from the sale of those stocks whose RSI have topped out and gotten back in before the stock recovered or those whose charts indicate a possible top?
If, for example, you sold FRG when the RSI hit 80 and dropped through 70, when would you have re-bought? At RSI 40, 50 or? In looking at a stock, such as FRG, a buy and hold strategy appears to work well over time.
PDN is another example – should you have sold at the RSI double top of 70 and would you have gotten back in at RSI 30, 40 or?
As a personal example, I have held LAM for quite awhile and have no complaints about what it has done. Yes, I might have locked in profits from time to time, but, based upon the fundamentals, I expect the stock to climb higher. (I’ve seen one analyst report expected CDN $18 or higher and a hopeful guess on Stockhouse of $35 -no justification – just a number – but for the moment, I see no reason not to continue holding.) LAM constitutes a ridiculous proportion of my portfolio and yet I still expect it to continue to grow. I’m hesitant to sell shares because LAM appears to be a hot stock.
I am not trying to imply that yours is not a good strategy – or to get you to change what you do. I struggle with my own approach and don’t know whether I’m too lazy to trade in and out more frequently or whether a good purchase of a stock with good fundamentals is a good stock to hold. I suspect that it’s not as important now as when the market gets close to a top. Then, I’m sure that your approach will win the day.
All teh best –
Bob
You raise good points; only time will tell which approach is correct. In a long term bull market, a buy and hold strategy will be very effective.
However, you never make a profit until you sell. It’s as simple as that. The question, of course, is when do you sell?
My approach is to take some profits off the table as a stock rises. If the RSI is up in the 70 or higher range the chances of a pullback are increased, so that’s when I look at selling. My hope is that I take the profits from that sale and re-invest them in something else that is still on the way up.
Getting back in is very tricky, but the analysis is basically the same as when you buy a stock for the first time.
If you don’t have the time or inclination to spend an hour a day watching your portfolio, the buy and hold strategy is probably more appropriate.
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