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« Randgold Resources Limited Options Up 100% in one Month | Main | Uranium-Stocks: Portfolio Update 30 June 2009 »
Wednesday
Jul082009

Stocks: How Many Should You Own



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A friend of ours who is also an investor called us up to tell us that he had just purchased another dozen or so gold stocks and then proceeded to pepper us with questions about each one. Well we knew a little about some of them but what became apparent was that our friend also knew very little about his purchases which caused us some concern. (read more)

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Reader Comments (4)

I believe that a significant number of people are not investors but rather speculators or gamblers as best.

Anybody who buys stocks or anything else without significant investigation is just begging to lose money. These folks probably run their entire lives on emotion and investing is no exception. Goofy

They walk amongst us and have a vote.

July 9, 2009 | Unregistered CommenterGary

I try and look at the Global situation and political situation then drill down from there:
- Only invest in stocks in stable political jurisdictions (US becoming ify, if not an outright no go area)
- Look at all the sectors and subsectors
- look at commodity prices, demand and futures
- determine sectors and commodities with uptrends short and long
- review list of players (stocks) in sector
- only consider exploration cos with 43-101s.
- look at their management and have a list of good managers
- look at charts and especially the slow stochastic, volumes
- never put more than 10% in any one stock
- get input from Broker (never much help)
- buy stock through my discount account
- never have more than about 12 stocks at any one time.
- Try to have one large cap and one junior in each sector.
- monitor daily

Then I sit and watch these stocks go to hell in a hand basket as some politician does something completely stupid and puts into place legislation that kills the sector.

Simple way to end up with a $million is to start with $ 2 million.

Seriously, have made some good coin my way.

July 9, 2009 | Unregistered CommenterGary

1.

Hi,

my stock selection strategy lies between 1 and 2 with the proviso that I do it biased towards stocks that are likely to do well as we enter an era defined by the end of cheap energy -aka: “The Post Peak Oil Era”…

An example would be a Molybdenum miner like Thompson Creek. I do not know large amounts about Thompson Creek -only that it is a major US Molybdenum producer and got severely beaten up last year. I do know that Molybdenum is used extensively in gas and oil pipelines and deep sea operations -much of which is rusting/needs replacement and is also used in the catalytic cracking of heavy oils that we will increasingly be relying on… So the macro picture of a likely non-discretional commodity with rising future usage gets a tick, the micro-economic entry point of an excessive fear-induced stock market panic sell-off for the stock also gets a big tick… Clearly a winner -so far I am up 250%+ this year, that’s my dinner party story anyway… :o)

Others that ‘fitted the bill’:

1. Moly Mines: soon to be major Moly miner. Ditto TC reasons..
2. Rubicon: Saphire substrates for LED lighting -this is the future of lighting when energy bills go through the roof (£5000 bills anyone in the UK or are you going to do something about it???)
3. Lynas: Rare Earths -Neodynium for wind power, hybrids
4. +++plenty more but around 20 tops -enough so I can keep an eye on them but not day trading.

…anyway, Uranium is in there somewhere…

Nick.

Comment by noutram — July 9, 2009 @ 12:47 pm

2.

I don’t know if it qualifies as a strategy exactly, but it has elements that your three don’t. Its biases is selection of a number of precious metal stocks from those recommended by sources I respect and consider reliable, including you. The key here is using review of research conducted by others that are more focused and experienced to make decisions.

I select stocks from the mid to upper tier of companies. Time does not allow following the juniors. And, although options are exciting and potentially more rewarding, my level of expertise is insufficient to trade them.

Now the next part of my strategy, if you classify it as one, is to play trends, long term trends and fluxuations within them. To use a baseball analogy, I try to consistently hit singles, some doubles and an occasional triple. I don’t “swing for the stands”. In practice this involves using basic technical analysis to time purchases and sales, take profits and cut looses.

Hope this adds something to the discussion.

Many thanks for your newsletter. Your research and analysis are both good and greatly appreciated. I read it religiously.

Richard

Comment by Richard Sywulka — July 9, 2009 @ 3:03 pm

3.

I am writing in order to comment on the above article that was recently released. You asked what a person’s investment strategy is. In my case, I am a believer in peak oil. I also believe that all fiat currencies fail and that afterwards, there is a reversion back to a hard currency.

In the case of peak oil, this event will happen only once in the whole history of our planet. So, getting that right and investing in energies could be very profitable if energy prices continue to rise, which it seems they eventually will do. In energy investing, I want to own energies: ones that we use now and which I think we will continue to use and which will become more and more expensive as supplies tend to dwindle down in future times. So, that means, I like crude oil, natural gas, coal and uranium. I also want to be invested in companies that are involved in alternative energies. This could be in the form of companies that construct energy efficient equipment, alternative energy suppliers or manufacturers of wind turbines etc. In energy investing, I also want to invest in transportation companies that I think will do well when or if energy prices rise very high again which I think they will. Transportation companies that I think will do well in this environment are rail companies and companies that do work within this somewhat smallish industry.

Then, I like to invest in gold, silver and presently even a little bit in industrial metals. In gold and silver stocks, I want to own some large miners, some middle, some juniors, some exploration companies and some drillers. I also want to own physical gold and silver and I want to keep some shares in the etfs.

Furthermore, if I think that something gets oversold, say natural gas, then I will want to focus capital in that area. Now seems like a good time to be investing in natural gas (commodity). So, now, I want to buy as much of that as I can because it is so cheap relatively speaking. There are other stocks or commodities that get bought when prices fall as well.

I am not the type of person who puts all of his eggs into one basket. I never was and I never will be. I have identified the areas that I think are important and I wish to safely diversify within those areas and when low prices come along I want to buy more then walk away and wait. When prices rise back again then I wish to sell and look for more sales. This is how I am a sniper yet how I use diversification to limit some of the downside risk. I am a believer in commodities, gold and silver and commodities stocks. I think that gold and silver are almost sacred substances. Their usage as real money is one of the primary means by which governments have ultimately been financially held accountable and by which inflation has been held in check. I wish that I could simply find one stock or several stocks and say that I felt safe putting my money only in one or several of them but I can’t. I want broad diversification, but also, when the time is right, I want to put the petal to the metal and buy, buy, buy certain things when their prices hit super lows. It is a bit of a mixed bag approach. That’s what I am comfortable with and that is how I like to invest. Thank you for listening to how I like to invest.

Comment by Scott — July 9, 2009 @ 3:43 pm

Actually all of you are doing much the same as I am except that I also strongly believe in some of the charts like the slow stochastic which I understand many of the top analysts use to make their recommendations.

I believe that the main difference between what I do and what you all seem to do is that I am not a buy and hold person and have had no luck in personally timing the markets so am "funditech" (name). this is half fundamental as I also believe in the peak oil and the precious metals and certain commodities on a macro level but as I cannot time to buy and sell and when it comes to picking a stock I use the technical charts, like big charts for my final decision. I hate paying commissions so use a discount brokerage outfit.

July 10, 2009 | Unregistered CommenterGary

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