Like it then, like it again
By Ellis Martin
This summer seems to be very volatile with relation to the market. Many stocks have trailed off, some a bit more than usual. Should this matter with regard to your own portfolio and the stocks that you hold? This is a very good question. The answer depends on what you hold and the condition of your own finances. If the companies that you have positions in are solid, meaning they have proven assets, a good management team and lots of cash in the bank, why wouldn’t you hold onto that stock or perhaps accumulate more at bargain prices that were not available earlier this year? That might be the better strategy than selling while these stocks are low and taking a loss, or a possible tax write off, although there is some value in that. But if you are invested in metals and these metals have a market, whether it be China or India or elsewhere, why would you jump ship now on these solid companies that you may hold? Perhaps you wouldn’t and perhaps you shouldn’t. On the other hand, if you really need the funds and must sell while your investments are at a low, then maybe you shouldn’t be in the market in the first place, and taking a bit of loss right now may save some of your assets. There are no solid guarantees in this business. It’s all very speculative. High risk and potential high gain or loss.
We make mistakes investing, all of us do. Sometimes we get impatient and cannot wait for a company’s stock to peak on its way up. We sell before the top, or not even close to it. We may take a 20% profit when in fact there could be a 200 to 400 percent profit to behold. Or we sell at the bottom, when the stock takes a bit of a dive. We get impatient. We get scared. Emotion creeps in and some of us panic. In the mining industry, is not uncommon for great gains to be had during the course of a season based on what’s been happening during the last few years. Many companies with real assets produce news that drives their market during specific seasons, some of them winter, fall and spring, even early summer. You have to know the cycles of these companies to be speculating in them in the short term. You can always sell at yearly peaks and come back in during these lows, may of them in the summer. That’s if you believe in the deal and you’ve done your homework.
Now if you’ve done your homework and the entire market is reacting to big news such as a real estate mortgage crisis and your stocks all take a slight dump in one or two days….that should tell you something. Your investments may remain solid and this dive is an anomaly related to unrelated news. Talk and chatter. Media buzz. They most likely will rise again as I believe we are in the middle of a very long cycle and an overall bull market in resources. They will most likely bounce back up at some point if the deals are real. Consider possibly accumulating more of what you already own during this bit of a dip. Consider accumulating stocks that you’ve like but have been sitting on the fence and not jumping in. The summer is usually the time for accumulation, during these seasonal dips. Remember, if you liked it then, why shouldn’t you like it again and now.
Look over your portfolio and make your own decision. If you didn’t take profits before these companies charted down, why would you take a loss now? Assess what you can afford to do and make decisions accordingly.
