Well as a person who entered into the uranium stocks in April 07 (top) and dismissng the lessons learned from the past (tech top) I have to say that I am most disappointed for having put myself in the position of being down 42%, a direct result of not using protection, much like having unprtected sex!
In some ways I do feel fortunate having continued to buy many of the quality widely touted stocks on the way down, but some of the many dreadful entry points just sit there like dead money, needing a resurrection of biblical proportions to come back to life.
As many of us newbies have learned this past year, often the easiest choices on the surface turn out to yield the poorest results. In this case it has obviously been BUY AND HOLD.
It is nobodys fault that this didn't work, as our sector was the first to feel the hit of market risk re-assessment, and more than likely will be the last to return, as smart money (big money) doesn't take unnecessary risk of speculation in bear markets, when many high quality companies are out there with signs for sale! They gravitate instead towards the Proctor and Gambles! Pun intended.
This takes me to the direction that our fearless leader (Dines) is suggesting we continue to follow. HOLD!
Why? If you liked DNN at $14 and MGA at $8, and LAM at$12, and PDN at $8 and so on, why in the world would you not like them at 2 and 3 and 4 and 5 dollars and so on? HOLD?
Look, if you made a bad investment, and the fundamentals have changed, and prospects are no longer good or feasible then SELL Sell now, sell into rallies, do whatever but work your way out! But if you feel that the long term fundamentals are still in tact and feel that you have quality holdings, in companies that provide great upside long term potential than BUY BUY BUY!! JUST USE SOME PROTECTION!
The broad market action in the last 10 days or so, has been repeated with alot of frequency, and that is that markets have RALLIED into the close, a bullish trend, a direct response relating specifically to helicopter Ben. His willingness to cut rates to save the financials, creates opportunities for large scale consolidations and takeovers amongst financial companies and soon coming, the bond insurers.
The BEARS are getting scared, and the BULLS are becoming more powerful, as they should be, because Ben is going to keep cutting. Many suspect by the summer the markets should be rallying strong, led by the financials. It LOOKS to have already started.
So whats the point to all this? I wouldn't recommend waiting for these stocks to go up 30% from here before I re-entered the market, more risk. The time to get in is now, volumes have been lowered, panic selling appears to be gone and these stocks seem to be sitting in stronger hands, ours. Not the hedgies, and institutions, as they have supposedly some financial responsibilities.
Since December, I have been selling out of poor entry points, while still retaining strong postions in the Metals sector, utilizing those funds to buy my strongest potential stocks on weakness. Fortunately, as we all know there have been a couple short (1 week or so) rallies to make nice profits and build more managable postions. I believe that this direction will continue, after another possible re-test, with longer sustained rallies going forward. Thats my bet, I still believe in the fundamentals and the story and am excited to build a portfolio of great positions for the mania that is sure to follow! Volatility is our friend here if we only have the courage and wisdom to learn from it, embrace it and move within it.
It is sad to admit that Suzie Orman gives better advice for stock management than our more sophisticated leaders. Cut the dead money, take the losses, and re-deploy carefully and patiently. Oh yeah, and when you get a 40% profit take it and say thank you and try to repeat it.
But man, if you make a mistake and get sick because of it, you had better go to the doctor and get a shot, dont just sit there and HOLD it and hope that its gonna get better!
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