What should I do

[Gonzoo]

  Hello every one, I'm new to investing and am looking for some advice, my portfolio is up 108 % since October last year. Should I continue to hold or should I unload some of my positions .... My portfolio includes PNP URC LAM BAY and QUC, I have 10,000 shares of each of the above mentioned stocks...

thank you.

[sunseeker]

Hi Gonzoo
Re your post today:

 

Hello every one, I'm new to investing and am looking for some advice, my portfolio is up 108 % since October last year. Should I continue to hold or should I unload some of my positions .... My portfolio includes PNP URC LAM BAY and QUC, I have 10,000 shares of each of the above mentioned stocks...

thank you.

 
So you want to know what to do? Well you could start by becoming my financial advisor. Up 108%!!! I thought I was lucky. 

There’s no short answer it all rather depends on your age and circumstances.
In your position I would be sorely tempted to take all my profits, and let my original stake ride. Another rule of thumb that I have heard of is to take your age away from 100 and bank that number as a percentage. Another way to look at it is to consider your net worth. Look at that figure hypothetically to work out what point would you feel devastated if the market turned nasty and take it from there.
I envisage some sort of a significant pull back before this year is out so to me it’s sensible to have enough money on the sidelines to take advantage of that scenario. On the occasions that I have felt that good about my overall performance a fall has always been waiting around the corner.

Some of my favourite quotes:
“Buy when there's blood in the streets, even if the blood is your own.
Sell  during the victory parade.”

"Fortunes are made by buying low and selling too soon."
 
ATB 

[jjj000]

If it were me, I would probably be taking profits on at least a third of my positions right now, maybe half.  And let the rest run and see where it goes.

But that's just me... if you've been following my posts you know to take that with a grain of salt as I base my decision on a whole lot of random technical things you may or may not be interested in

Although having been where you are myself just two years ago... I look back and would have been very happy had I taken profits more often.  So that would be my advice to you.  No harm in taking profits.

Of course we are nearing the end of the year as well, so if you want to risk holding on in order to push your profits to 2010 for tax purposes... I wouldn't blame you for that either...

[dananini]

I would unload half of the stocks you have mentioned.Play with house money.You must have also loaded-up with some of the other 100% gainers of the past year, none of which are on our common list. (PNP??).

I own about 10k shares of each of the names you've highlighted, and your yield is pretty impressive if you go back to 10/08.
Maybe my statements are missing a decimal here or there.

I'll say it again though, pay attention to the bhp situation and the doe announcement on thursday. Best of luck.

[Depleted]

Hi Gonzoo, IMHO, this is what I see, but I really only look at the TA of it..

PNP is in consolidation and l am waiting fora breakout to the upside. The stock "seems to be waiting for something" I don't know "what" it is waiting for, but it is.....I own it and am holding.

URC,LAM and BAY are buys on lows in this area. Look at them for the past 2 years. the market is cleaning up the weaker stock. Money is flowing from weak hands to stronger hands. I own LAM and am adding more.

QUC..Sorry, This one was over a week or so ago. My TA signals said out, and I don't look back to worry about it. Cashed in already. Nothing wrong with taking profits. Let the other guy worry about getting out at the top....

Strategy.
All comments on this are really good, and any of them can work out very well for you. I think you need to evaluate your feelings of sadness, risk, euphoria, and ensure your emotions are in check, and formulate an EXIT PLAN that is not based on emotion. Sometimes when we are "up" the emotions creep in only to cloud our thought process. Remember one very important fact, though, you still haven't "made" a penny, yet . That can only happen if you sell.
It seems simple enough, but you really must formulate a solid game plan for an exit strategy......before you buy in....This way, you can comfortably ride out the action and know when to sell, without worrying yourself sick over it, and you get a better night's sleep, also......Good Luck...Depleted 

[Bottomfeeder]

What can I add to the good advice you've already been given?

I guess that the first thing you must do is manage your risk and understand your time horizons.  While I can tell you I got into this for the long haul, I sure didn't imagine that it would come from such a hole, while still up over 100% this year, 350% since October, I still have a long way to go to get even it seems, (to about 300 on Mervs Daily index)  Ultimately I am not anticipating a complete exit before 2014, which is more of a venture capitalist approach to investment I think.

Noone can know what this investment represents to your personal wealth, obligations, income and future needs, BUT IMO 100% move on $1 stocks is the tip of the iceberg.  IF you are able to sell and buy back cheaper than great, personally I don't think that many people are really able to accomplish that with any consistency and outperform a hold strategy, certainly when upward trends remain in tact, and especially in thinly traded securities.

So with that being said I recommend entering and exiting in stages, keeping in mind what is going on in the world around you, within your sector, broad markets, economy, as well as your personal financial situation.

Right now, I am watching Merv to try and play the trend in conjunction with the spot market  When I look at where the spot market is now, vs where the stocks were when spot was last below 42 I see tremendous positive upwards action. Check the spot chart and see when it started going up and how your stocks moved as it went up.  Now look at how much they gave back on the move back down.  The stocks on average retained approximately 65% of the up move while spot went completely back to where it started.

NOW we are starting to climb again and I believe it is a reasonable bet to assume we should go back up in a fairly straight line to approach the $54 level, maybe short of it, maybe it breaks through. 

Now if we don't have an upward move in spot this week, I might unload 25%, but if it goes up your miners should follow.  We have the DOE on Thursday, which MAY impact the following weeks spot (following Monday) if the move is smallish to the downside I am holding.

Anyway I am kind of rambling, but I think that you kind of have to have a comprehensive approach to not just managing profits but also managing risk, by understanding and paying attention to what is going on around you.  That is the best medicine for controlling your emotions IMO.

Proper asset allocations is the most important part of managing risk.  If you were worth 5 million dollars maybe having 50K out there isn't a big deal, but if you are worth 100K then you lose.  Why because you are forced to sell your winners and unable to let them run.  Example I was in FAS at an average of $5 in March, I think adjusted on a reverse split maybe it would have been $15, well now FAS is trading around $86.  Now while I made my 20-30%, had my allocation been more appropriate (for me) I would have made a killing 500% or so, with alot LESS skin in the game.  Let that sink in.

Manage YOUR risk.

[Gonzoo]

Thank you for the great advice everyone ...I have a lot to think about.

[davidslane]

This thread seems just too juicy not to jump in.


For the record, when I started following Dines and his micro-cap uranium stocks in 2004, I gained about 270% when the uranium high hit around May 2007 a little over 3 years later.

What the magic of margin will do on the way up.


Then, into last October, I lost over 90% of that to where I was over 80% off my original stake that I had started with in 2004.

That's the magic of margin during a crash and holding onto my positions in all of those shells of micro-caps that Dines suggested all the way down waiting for that next rally to sell.

So, where am I from last October's bottom?
Up over 350% and now at about 20% off my original 2004 stake.


And that's without any margin this time since the October bottom (I'm done with margin).


How did I do it?
Sold all my uranium stocks, energy stocks and any non-gold/silver stocks, and bought nothing but gold and silver mining stocks.
And then I held them all.


So, what have I learned.
Margin is evil.
Micro-cap stocks are evil in a bear market and great in a bull market.
And Dines is a charletin in my opinion.


My take is that being a successful stock investor today is nothing more than trying to front-load the next psychological investing wave and getting out before the wave crests.

Where's the next wave? Gold and silver mining stocks. The few stocks which actually did well during the deflationary period of the Great Depression.


There are many questions out there and it is hard to get a good read on this market.
So, let's discuss.

1) The US dollar seems to be driving everything inversely. Equities, energy, uranium, gold/silver. Follow the dollar and you can figure out everything else. So, no use in diversifying as all asset classes seemed correlated to the US dollar (granted, everything moves in different degrees). So, do you have to be in everything or will just one asset class suffice?

2) In July 2008, the dollar index was at 72 and intervention led to a huge rally in the US dollar. Add flight to safety concerns and the US dollar rallied hugely, killing gold, energy and equities. Can it happen again as the dollar sits around 76? Will the US dollar test 72 before rallying? Will it make new lows? And if intervention leads to a rally in the US dollar, will equities tank? And if so, will gold and silver stocks go with them? And lastly, is the US dollar even considered a flight to safety trade anymore?

3) If the US dollar is now the new yen for terms of a carry trade, then will any rally in the US dollar be capped?

4) I think that unemployment will persist as cap utilization is at an historically low level, this all causing wage deflation. This will lead to price deflation. This could be bad for gold if we have a deflation scare or good for gold is the government prints more money to fight deflation. Eventually, we'll have inflation? Right? Right? Just ask the Japanese after 20 years.

5) I also think US (and global) economies are very soft, housing prices are still too high, tons of mortgage defaults and home foreclosures are on their way and stocks are way, way over valued. And unemployment will continue to rise. So, I think a crash is coming. But when? I keep hearing that a 6 month 60% rally is all to be expected in a bear market. So, are we ready to crash? Like in 1998? Like in 1999? You get the point. This market won't crash with everyone on the short side of the boat. Granted, insider selling is astronimically high right now (read that somewhere). So, when do we crash.

6) Gold/silver tends to spike every 2 years like clockwork starting around July, August, September and lasting 6 months. The spike tends to go from the previous high and rise about 40% to 50%. Well, it's that time again and we just broke through the old high. Will we see $1,400 by February? But what if the US dollar rallies before then. Gold has only really been rallying vs. the US dollar, not other currencies.

7) Lastly, gold mining stocks tend to lead gold bullion when gold runs up. Right now, bullion is leading gold mining stocks? So, does that mean a really in gold/silver stocks isn't happening right now or that one is getting ready to start?


Most of what I read suggests that equities will tank soon. Maybe this week. Definitely within 6 weeks.
Can't see this happening without a US dollar rally which will kill gold.
But these newsletter writers also say gold should make new highs into February.
What will happen with gold/silver mining stocks if equities tank?


The cleanest solution would be to gold/silver to ride the inflation scare into the end of its 6 month rally period and then have the whole market tank together into a deflation scare, say in February. That's easy, just hold gold/silver stocks into February. But, that sounds too clean.  Must be ready for a sell off much sooner. Maybe.


So, what do I suggest?


Forget about uranium stocks. Same goes for all energy, material stocks and rare minerals.
Those are stocks for strong economic times. They will all go down with a weak economy.


If you want to own commodities in case of inflation, then choose gold/silver.
If all asset classes are moving together, at least pick the one that will go up the most when the economy is bad or when we see inflation.


I can't come up with any asset class I would recommend right now except gold/silver (and cash).
Not equities, not bonds, not commodities, not real estate, not foreign currencies.

If we have bad deflation, I still say gold/silver does the best because fo the printing press.
If we have weak global economies, gold/silver will do the best due to inflation fears and the printing press.
If we have bad inflation, I say gold/silver does the best.
If we have strong global economies, they will be artificially propped by money printing which will still have gold/silver do the best (because there is no way economies around the world are strong enough to rally without artificial stimulation).


Why have any other asset class?
Sell your uranium and energy and all the rest and buy gold/silver stocks.

But be ready to sell them at the first sign of failures to make new highs.
And be ready to buy back in lower.
Or just hold them for 2 years.

[sidewinder]

Gold has only really been rallying vs. the US dollar, not other currencies.

[davidslane]

I stand corrected.
Go gold.

[jjj000]

SW- what date was that chart made?

Certainly illustrates relative strength in the Aussie Dollar and the Brazilian Real...


Side note, anyone see this article today:

Energy crisis is postponed as new gas rescues the world
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6299291/Energy-crisis-is-postponed-as-new-gas-rescues-the-world.html


Very interesting implications if true... in a whole lotta area...

[onlooker]

Davidslane:

I am glad that you found this thread just too juicy to not to jump in.

I think your analysis on gold and silver was based on a lot of thorough research and on personal experiences (losses from uranium stocks).  IMO, your analysis was done with no emotional attachments (such as patriotism to a country, familiarity with certain stocks).  Emotional attachments are deadly to an investor because they will cloud one to think clearly and objectively. 

I think you clearly see that the real US economy is still weak, and that in the future, there will be a severe deflation or inflation.  That only gold / silver will do well in either situation.

And, I agree with your comments on the dangers of using margin.

[Gonzoo]

   So Gold and Silver ...any suggestions on which stocks to buy...and are any of my current holdings worth keeping. PNP URC LAM BAY and QUC,     PNP has a large precious metals holding in its portfolio.


thanks again.

[sidewinder]

That chart was part of a daily email I get and would assume it was current jjjooo.  However, it does not contain a reference to date so it could be from 1979 for all I know.  Source is Michael Berry's Morning Notes.

[Bottomfeeder]

Don't forget spot price uranium up 600% in 10 years.

DSL....looks like you sold the U miners at the bottom and bought gold/silver miners at the bottom.  Glad you are comfortable though with what your in, that is really a very important part of being successful in this business I believe.

I am glad though that you gave up the margin stuff, toxic.  You better be a very good short term trader if your playin with margin.

GLTA