JohnQ.Public,
I'm really excited now because I realize if I follow your investment strategy, I could really get in shape! VVBG!
Just kidding JQP, just kidding.
Seriously now, logic can be a trap in the markets.
Nothing more frustrating than being right and still being wrong.
As another reply to your post suggested, logic is not the stock markets price measure as much as perception, a poker game as they said. To deal with the resulting uncooperative price action one must sometimes shift tactics, logic be damned. It is also helpful to be conversant in another sector that operates off of a different market perception. For example, I've been a gold stock investor on and off for years. In 97 I got whacked pretty good with the Aussie July 4th gold sale, though I was not on margin. What I did the rest of the year was to use those holdings for margin and invest that margin in tech stocks. Didn't know a whole bunch about them but the perception was right for a profit that made my gold stock losses up. I shoulda woulda coulda stayed in tech but thats a long story!
I also use TA, charts and when it gets down to the tough calls, what they used to say "reading the tape". That gets subjective and unquantifiable, is intuitive and perhaps illogical; nevertheless it has saved my financial butt a half dozen times. You have to read "Reminiscences of a Stock Operator" If the price flow (tape) shows it wants to go down and the charts show bad things ahead, throw the logic to heck and get out. This does not work if one is being affected by fear or greed at the time, re the sheeple VBG.
This is exactly what I did with RRC per a recent post here lately, tape and chart showed a problem which defied the imminent logic of NG prices. I also considered the fact of my own portfolio: what if I sustained a 20% or greater loss in RRC and FGI, my main holdings, at the same time? Bingo, margin call, RRC would generate a margin call by going to 4 5/8 at my broker and it looked most likely to go down.
So I sold it all, though I am convinced of the fundamentals of the company, as are you. I reduced my amount of overall margin and after looking at the situation with the general market (read down) and the bullish read on gold just before and immediately after the Bank of England sale I went back into that depressed sector via AEM, a promising gold stock.
Profits there have offset FGI losses. As gold moves very quickly at times, the chances of cashing a profit and being back into RRC for any upmoves seem reasonable.
BTW, I like AEM as a gold stock as much as I like RRC for a NG stock, I may keep quite a bit of it as long as gold seems healthy and I can watch it! Back in May I had very nice profits in gold stocks of which I gave half back after the BOE sale announcement. I had learned my lesson with the Aussie sale, I sold, but I was just a little bit effected by greed and hesitated, which cost me half my profits.
Well John, you should be asleep by now after reading this, heh heh.
Best of luck,
Roebear |
