Hi Cakster,
I realize your posting was to make fun of Dines and how he never admits a mistake and would never disclose that his readers were unhappy.
And of course, Casey's group is much more thick skinned and can handle critisim.
But to be fair to the Doug Casey group (which is like 10 different contributors), I thought it would be good for the group to be able to read that whole section from this week's "The Room":
...we recommended avoiding most traditional stock sectors, selling any real estate you might own as a speculation and to concentrate more of your assets into gold and gold shares.
How did we do? Well, year to date, the S&P 500 is up just 3.19%, not much of a reward. Gold, by contrast, has risen from $639 to as high as $841, and is now at $811… a year-to-date gain of 27%. Okay, not bad.
The problem, however, has been the sloppy performance of the gold stocks, large and small. While the HUI index of producing gold stocks is up 15%, since mid-October it has decisively underperformed the broader stock indices.
And the situation has been even worse for junior gold stocks. In the December 2006 edition, we recommended Columbus Gold (V.CGT) at a price of C$1.07. Subsequently, it traded as high as C$1.89 (in April), but today sits at C$1.19. So, the best you could have done is to buy it on our initial recommendation. If you bought it in April, you’d be sitting on a substantial loss.
(On our other pick from that same edition, Global Copper, recommended at C$2.33, we did much better… but only because we sold it, along with most of our other base metals positions, in August 2007 at C$3.95 for a 69% gain in just over 7 months).
But, and this is the point, most gold stocks have failed to respond with any real vigor to the clear and present danger that has moved bullion prices higher, and kept those prices fairly solid near $800. In fact, for many of our recommended stocks, the past couple of months can only be described as a blood bath.
Which, unsurprisingly, has encouraged some readers to elevated heights of passion in their email correspondence with us. To quote a couple of recent communiqués...
I'm amazed to see the boasting about your stock picks beating the market. Since subscribing, I've made many purchases of small companies over the past year based on your recommendations, and they've cost me a ton of money. Energy, uranium, gold explorers, silver companies - they are all way down, typically 25 to 60%. I don't think a single recommendation or item of analysis proved to be helpful, and regret thinking it would be.
The stocks that have done ok are the larger companies that I picked on my own. But the expert knowledge I thought I was getting here has done far more harm than good.
I'd like to cancel my subscriptions to all your services.
Or, this, my recent favorite, received today...
F#^& you Casey, and your pathetic stock picks. You never could pick a s#%# anyway.
Just play polo, and all the bulls#%# you rave about, and get finally f$*#@&.
You are a sissy, full of crap, and you lie too much.
You might imagine that, receiving such emails, we wring our hands and toe the dirt apologetically. You’d be wrong.
Of course, we wish all our subscribers will be nothing but happy. But we are not in the business of picking stocks that only go up in a straight line, with only a modicum of volatility along the way.
Instead, our mandate is to (a) get the trend right, and then (b) find high-quality stocks that we think will provide extraordinary returns as that trend unfolds.
Even Peter Pottymouth just quoted above will have a hard time arguing that we haven’t called the economic trend right.
But what about the resource stocks? After all, that’s where the rubber meets the road, and the reason that most of you subscribe to those of our publications dedicated to that sector.
In our view, the world’s financial institutions and investment community at large is in the throes of trying to figure out just how bad the credit crisis is and where it will lead. They then need to come to grips with the need to readjust their portfolios for the new economic and investment environment.
What we have witnessed of late, as far as resource stocks are concerned, is perfectly understandable albeit indiscriminate selling as investors duck for cover. Resource stocks are, after all, considered “risky” because of their volatility. Thus, they are among the first to be sold by investors looking to move their portfolios into a fetal position.
Exacerbating the situation, we have year-end tax loss selling that helps to feed a vicious, albeit brief, down cycle.
Would we have preferred if the resource stocks had just powered higher? Of course, because there is only so much buying on the dips you can do (though personally, both Doug and I continue to do so… aggressively).
But we don’t have a magic face slap button we can push to wake up the investment masses to the reality that the global economy is on very thin ice and the only thing keeping it from falling apart are monumental, unprecedented moves by the central banks to hold things together by unleashing massive quantities of fiat currencies.
Inflation is already here, and growing more serious by the day. And, guess what? The markets already know it, there is no other explanation for gold clinging on to the $800 level. If the big money thought we were heading into a serious deflation, then gold would be trading much, much lower.
How long before the market catches on to the fact that gold stocks offer a leveraged way to play gold? We don’t know... but when it does, we want to be positioned in the companies that are likely to get the most attention.
We constantly stress patience and jump up and down, urging readers to invest in this sector with money they can afford to lose some significant percentage of. Not only will that assure you sleep well at night, but it also assures you won’t be panicked out of a good position by a sharp correction.
On the topic of how to approach this sector, I’d like to share another subscriber email, this from Michael, received earlier this week. He and I have been in correspondence intermittently over the last couple of years. In the early going, he would write me complaining about the stocks getting away from him, or that he overpaid and later took a loss. I could only counsel patience and remind him not to overcommit to the sector, and to not chase stocks. Here’s his most recent email:
Hi David
I have been subscriber to Casey Research for 3 years. I learned a lot that I think very important for a subscriber like me
-never chase a stock
-do not pay more than what Casey Research recommended
-be patient
-try to buy stocks at the price Casey Research recommends or lower
-buy on the dips....
CIA subscribers chase stocks too high. Why don’t they wait for a pullback? In the last few days, I bought more XXX and XXX, at really bargain prices now.
I will renew my subscription today. I don’t want to give up even with a big loss in the last few months.
I must trust Casey Research.
I wish Casey Research all the best & Merry Christmas to all of you.
Michael
Not to sound patronizing, but watching Michael’s evolution from a neophyte into a disciplined speculator gives me the same sort of warm and happy feeling I get when watching one of my children succeed at mastering some new challenge.
And rest assured that we don’t take Michael’s trust – or yours – lightly. Everybody on this side of the table works harder than you can imagine to bring you research, ideas and recommendations that will add extraordinary value to your lives… and to your brokerage statements.
Of course, our analysis could be wrong and a white knight could ride over the horizon and save the U.S. economy, lifting the burden of debt-strapped consumers and sending them back into the stores for even bigger flat-screen TVs… and back into the housing market for new and better accommodations.
As you might suspect, we remain skeptical on that front and so, until we see something that suggests the trend is no longer our friend – something other than some volatility in our volatile stocks, that is – we are holding steady on our current path.
And from the December issue of Casey's Energy Speculator:
The Ghost of Christmas Past
On the plane, I crunched the numbers on where the markets have been in the past twelve months. With uranium and oil hitting all-time highs, you’d expect the junior equities to follow, but that has not been the case. Looking at the markets, we started to track the stock performances of TSXV-listed uranium and oil companies over the past 12 months.
Very nearly three-quarters of the oil stocks listed on the Toronto Venture Stock Exchange, 74.89%, are below what they were a year ago. This is a staggeringly high number, and it is unlike any other bull market. This means only 25% of the stocks in the oil sector are above where they were a year ago. How about uranium stocks? We found that the uranium stocks listed on the Toronto Venture Exchange have mirrored the oils: again, 75% are lower than a year ago.
So that got us thinking. How is the Casey Energy Speculator performing?
Nearly 60% of our stocks are in the green from where they were a year ago, more than double (140% better than the Venture Exchange) the proportion of the oil sector and the uranium sector. This is where I must crow a little bit about our solid research, as the probability of our getting this many winners in such a disastrous market is approximately 0.05%. (Binomial distribution says that an individual has a 99.95% probability of having more winners with the Casey Energy Speculator than playing the uranium and oil index. I am very proud of this statistic!)
A more telling statistic, however, is that only 2.5% of the uranium stocks listed on the Venture Exchange have doubled from where they were a year ago, while 33.33% of the stocks listed in the Casey Energy Speculator have doubled from where they were a year ago – a staggering 13 times higher. Simply if rather immodestly put, this means that when we win, we win big. Consider this fact: more than 60% of our winners are doubles, while only 10% of the uranium stock winners (winners defined as above last year's price) on the stock exchange have doubled in the past year. We have taken, and will continue to take, only the cream of the crop in order to provide our subscribers with solid returns, even in a time of extreme market adversity.
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