Published Every Thursday The Case For Deflation There is a strong body of thought that we are headed for a period of deflation. According to Harry Dent, author of “The Great Crash Ahead”, “we are in the initial stages of a Primary Bear Market“. He points out this is evidenced by the long-term chart on [...]
Whats-Hot-or-Not Periodically we publish our stock picks. Stocks that we like are “Hot” and listed below. Stocks not considered hot are sold. Since inception in February 2013, our picks has provided a 35.75% return. See our record and statistics on “our Performance” page. Buy FaceBook Inc (FB) Recommended Buy at $26 Facebook is an interesting [...]
The Way to Buy Stocks The stock market is a place to make and lose fortunes. Those more adventurous trade stocks with varying degrees of frequencies. They use trends, or signals, or technical analysis, or just guess and use their instinct as to whether a stock will rise or fall. The gain or loss is [...]
Whats-Hot-or-Not Periodically we publish our stock picks. Stocks that we like are “Hot” and listed below. Stocks not considered hot are ‘sold’. Whats-Hot-or-Not Buy Detour Gold $15.57 (DGC on TSX; DRGDF on OTC) During the last 60 days, there has been a meltdown in the price of some outstanding resource companies. Detour Gold Corporation is [...]
e Losses Raise Investor Anxiety
Junior resource stocks have had their worst beating in many years. Most are down 50% or more. It is a very difficult time for investors in these stocks. There are many explanations, but whatever the reasons, there are few buyers and many sellers. When good news is released by a company, it becomes a liquidity event and everyone lines up to sell the stock because there are buyers available. Bucking this trend is proving very difficult.
Investors are frightened, resulting in stock lows and fears last seen in the aftermath of the credit crunch of 2008 when many juniors crumbled and collapsed. Many companies are most apprehensive about their future as junior exploration companies rely on repeated visits to the market to raise funding for the next round of explorations, and there is little appetite in the markets these days to invest in any junior company. Company that are short of cash are worried about their future capability to stay in business. Those companies with little cash on hand, are being forced to turn over their properties to larger companies with the alternative being to lose the property entirely.
Out of this Doom and Gloom, There are Opportunities
First consider the illogical behavior of the stock market. Stocks rise or fall with little relationship to value. We have discussed this lack of relationship of stock price to vale many times, and the conclusion is always the same. Those that buy when stocks are low, do well in the market. Those that buy after the market has risen to dizzying heights, and buy because everyone else is buying, lose their shirts.
It is funny how quickly the psyche of investors can change. The same stock, with the same assets, with the same potential, can be worth $10.00 one month and the next month, no-one wants it at $0.10.
Emotions Drive Stock Market Values
Consider in 2008 when stocks fell so violently and so dramatically, that there were almost no buyers for them. Those few who had the intestinal fortitude to buy these beaten down stocks did very well indeed in the years 2009 through 2011.
It was similar to going into your local department store, and seeing all of the merchandise on the shelves marked down to 10% of what it was selling the day before. A major shopping spree took place for those that understood that these cycles always occur. These cycles of emotional desire to buy what is hot, and to sell what is not, are related to the business cycles that we refer to so often.
If you want a bargain, and if you want to buy low, and later sell high, the bargains are now waiting to be plucked. How jealous everyone will be that you had the good luck to buy when prices were so cheap.
Consider Some Facts
Commodity prices remain high and within a normal range of the high that they reached in the last cycle, yet the shares of the junior companies that own the un-mined deposits of these metals in the ground, are severely depressed. There is not a correlation.
There has been no dramatic slowdown anywhere in the world. The US continues to drag itself out of the mire with ever reducing unemployment and ever increasing car sales. Japan teeters near the fiscal cliff in the same manner that it has done for many years now, but the country has survived earthquakes and tsunami’s and still is the 2d or 3rd largest (depends how you calculate) economy in the world. China, in spite of predictions of a great bust, has proven itself to be resilient and if there is a slowdown, demand from the millions of new middle class consumers remains strong.
The US fiscal cliff is a gamesmanship political fight, with the ideologies of the two parties at odds with each other. This is not a fiscal cliff and it will produce no depression. What most people fail to understand is that this type of political infighting has gone on since the birth of the Republic, and this is nothing new. In her biography, “Team Of Rivals: The Political Genius of Abraham Lincoln,” Doris Kearns Goodwin recounts similar bitter politic fighting going to Abraham Lincoln.
The Fiscal Cliff will be remembered with laughter in the same vein that Y2000 is remembered as a humorous anecdote.
Producing Minerals From the Ground
The miners and producers of metals are making near record margins. Costs have moderated a bit, profit margins are high. Miners should be enjoying this success, but instead are mired in this emotion of pessimism.
The very fact that every mine can see at current world prices, all of their output, shows how robust the demand is, and how valuable these junior minors are.
But fear has taken over the TSX Venture and the last time that happened, it was the greatest buying opportunity of our lifetime. So it is now. In 2003, gold traded at $230 per ounze. Today it trades at $1,650 /oz, roughly an 8x increase in price. Yet the stock price of companies that own gold in the ground is dropping.
In 2003, oil traded at $30/bl. Today it trades close to $100/bvl – a 3x increase. Copper traded at less than $1.00 whereas today it trades around $3.00.
The value is there for the picking. This is an opportunity to buy these stocks.
CymorFund Stock Picks – What’s-Hot-or-Not In February 2013, we started suggesting stocks that were undervalued and had a strong upside potential. Most of our early picks were in the junior resource sector, and in spite of a horrific downturn in this sector, we are proud that our picks in this very short time, have preformed [...]
A Human is Just That – A Human Humans are always searching for the ‘leader’ who will inspire and lead his followers to riches and success. There is a belief that someone else exists that knows more than we do, and if we follow that person, we will bathe in his success and share his [...]
We have often remarked on how the USA will lead the recovery and that the next economic cycle will make its way through the doom and gloom in today’s market. We now have visible evidence that this is starting to happen. European Debt Crisis Pundits continue to insist that the EU (European Economic Union) must [...]
Comments From Part I – Stop Losses Are Protection for investors – A Fallacy A stop loss is intended to prevent the investor from losing more than an expected amount, but more often than not, a stop loss is instead a guarantee that normal and reoccurring volatility in a stock will trigger the stop loss [...]
An Over-Reaction to Current Debt Issues Those that are sophisticated enough and experienced enough, know that after every exuberance in an economic cycle, financial matters become so difficult that many come to the conclusion that “This Time It Is Different”. Analysts come to the conclusion that there is no escape from the inevitable and doom [...]
Advisers to Investing Readers will know that we often comment on the motivations of those that advise on where to invest, and what to invest in. They have their motivations and it is essential for investors to understand why your investment adviser recommends an investment and why a media pundit touts some stock or other. [...]
Knowing Basic Rules of Investing The purpose that I had in mind when I began this blog in 2010, was to give investors some insight into how the markets worked. Several blogs gave readers basic investing guidelines that were tried and true, and which stood the test of time. In my readings this week, I [...]
A Quote That is as Valid Today as Ever – by Abraham Lincoln Your own resolution to succeed is more important than any other one thing Many investors have seen their portfolios punished in the last year. The big Mutual Funds tell you that you should measure your returns against the norm, or against the [...]
In an interview with Small Cap Power earlier this year, the interviewer asked whether it was was an opportune time to buy gold. At that time the US Congress was in a stalemate over raising the debt limit. There were daily increasing fears about debt defaults in Europe. China was entering a slowdown and the [...]
An Overview of the Markets Investors today feel that they have been burnt as their stock portfolios have performed poorly. Each day they are bombarded with negative news from Syria where fighting continues, from Europe where the ever increasing debt crisis never seems to reach resolution, from Japan where debt levels continue to rise as [...]
How Investors Buy Hype Rather Than Reality As each new hot stock goes to market, there is a rush of investors scrambling to buy IPO stock at the offering. The calls to brokers from their clients asking for an allotment rises and the brokers scramble to get an allotment themselves in order to fill the [...]
Market Darlings That Disappoint There is a lot of talk currently about Apple Computers whose shares reached an astonishing $644 in April 2012. Today they trade at $585 which is a 9% drop in value. It is reminiscent somewhat of the painful share performance of Research in Motion (RIMM) which reached an equally astonishing $148 [...]
Investors Are Being Advised to Invest in Bonds or Dividends It is interesting how history repeats itself, yet few seem to understand this. Our economic world revolves in cycles, and each cycle is remarkably similar to the ones before and to the cycles that will be experienced in the future. As we near the bottom [...]
The Efficient Market Theory There is a long held belief that the stock market is the fore-teller of all that will happen. Somehow it is believed that the market can see into the future, and the rises or falls in the market foretell what will happen with some accuracy. Believers, which includes most people, ignore [...]
In our last Bl9og, we talked about the current downturn in the market and the ever climbing Wall of Worry. We referred to the never-ending economic cycles that have always existing and always will exist. They mirror the fluctuations in human emotions, which range from higher highs to lower lows, always exceeding in either direction [...]