retired re: ["<<<or, only buy a breakout to new highs thru prior resistance.<<<
"all this means for someone is that they will trade their pictures of croaked presidents for less gold shares than they could trade them for today..."]
...retired;
Not necessarially.
My point was to those that were in early at, or near the relative bottom of this cycle, or even those who got in at the first of the year and rode 50-75% moves up in the unhedged Gold/Silver stocks.
For those who did sell into this final leg HUI 130 - 150ish; my point was to lock in the profits on a portfolio weighted basis; but still to maintain 10-15% in Gold/Silver stocks.
Many of us were 50-65-75% portfolio weighted to the Gold/Silver stocks... I was 60%+ ish for the most part - and I pocketed the bulk of my position and profits; but,am holding a still respectable 15% position now.
So I sold 75% od my Gold/Silver stocks and kept 25% - which is a 15% portfolio weighted position.
The reason I did - was based more on the behavior and sentiment of the traders - than the underlying fundamentals of the miners themselves, or the POG.
Early cycle...I am a "sentiment contrarian" - ie: I bought when we were all ridiculed for doing so... when literally 99% of the media commentary toward gold, was sterotypical drivel and generally belittling the poor ole gold-buggers.
Now mid-cycle... I am once AGAIN a "sentiment contrarian" ... as the media commentary toward gold has reversed; being generally positive and acknowledging the broad market outperformance and we even saw such Indicators as James Cramer who couldn't have been more negative towards gold... buy in...and the hot money - mo-mo crowd finally joined us on the Yellow Train.
In cyclicals - you'll often make more money "Trading the Traders" than trading on the underlying fundamentals.
Sentiment drives supply & demand..... and supply & demand, not earnings, not fundamentals - drive stock prices.
So I trade sentiment - on a contrarian basis.
Presently; this is a time to step back and to count the money (VBG), but more importantly; to let a little dust settle; to embrace the PAUSE THAT REFRESHES and to guage the reaction of the hot, mo-mo money - which is selling off and dumping a bit here... and to reassess the underlying fundamental catalysts for gold...ie: a weaker dollar, rising account deficit, irrational derivatives positions, global geopolitical risk, ramping money supply etc....
I've found thru experience; that stepping aside during periods of sentiment transition are much better risk vs reward plays; than trying to re-load on each and every dip... which in cyclicals is a Bruce Lee-esque "Game of Death"... ala the OSX June Swoon's of 1998 and 2000, to where the first dip from the top, was followed by another, then another, then another and yet another... and where the majority of those in the sector gave back most, if not all - of that cycles profits....and many of them did it twice... did it in 1998 and did it again in 2000 and were calling for OSXn140 by August just months ago in classic massochistic fashion yet again.
This is what cured me of playing the trading range during Mid-Cycle sentiment shakeouts.
Given the speed of Institutional Sector Rotation and money flows in the market over the last couple of years... and I'd hope that most would stipulate that indeed; SECTOR ROTATION is the game of late... that you must always be both early in ...and early out - or you get trampled.
The SOX and BTK have demonstrated that of late... and the Homebuilders will (VBG)... and the OSX has been the posterchild of how rapidly the sector's stocks can blow off before underlying fundamentals ever do.
Pigs get Fat, but Hogs (always) get Slaughtered:
HGMCY from $4 to $19 was enough.
KGC from .60 cents to $2.50 was enough.
NEM from $18 to $30 was enough.
DROOY from .80 some cents to $5+ was enough.
I've learned from the OSX - that after 3-4 major legs up in a cycle and after a multitude of doubles, triples and 4-baggers that it nearly always pays to play more technically than fundamentally and to pass on the urge to chase dips and instead to only "re-buy" on new strength thru prior resistance and into new highs.
Sure, there will be a dip and a price that I will re-buy... I'm watching HUI sub 110 and think the GOLD CABAL will be savy enough to hit us technically and once the HUI breaks 110 - they'll artifically pound it down thru 100 and a sentiment over-reaction could take us all the way down to 80ish... and THAT will the DIP to buy - with the important caveat that the underlying positive catalysts remain for Gold.
Buying HUI 120ish doesn't interest me... as SELLING HUI 130 to 150 was "my thing".... it's a kind of - "been there and done that" mindset.
Why would buying HUI 120 interest you, if you sold 130 to 150 ?
Buying HUI 60, or 70 interested me... 120 is fools gold territory folks... plain & simple.
It's whipsaw city territory.
These stocks aren't cyclically CHEAP here...
They do have SIGNIFICANT "potential" remaining upside... 50% - even in some cases 100% + imho... but, don't confuse that with being CHEAP....especially if you could already have pocketed 2,3 and 4 baggers.
Greed is good.
Greed and Cheap are especially good.
Greed is cashing in a 3-4 bagger in KGC, or HGMCY after you got in cheap.
Stupidity is not good.
Stupidity is failing to cash in KGC, or HGMCY off a 3-4 bagger and watching it turn into a double, or single....and INSANITY is buying more all the way down.. when we all know that it's the nature of the beast and an absolute inevitability..that in ALL commodity sector cycles that most shareprice's peak - long before the deteriorating fundamentals of the underlying commodity begin to appear on the horizon.
There is only one way I now to guarantee BOTH - that I have pocketed a bevy of doubles, triples and 4-baggers without ANY risk of giving it back... and that's to cash them in and bank the profits and to refuse to buy any dips.
And there is also only one way I know to guarantee that I have the opportunity to see any and all potential remaining upside - say to $30 HGMCY, or $60 NEM, or $5 KGC - BUT ! - also with no opportunity of ever seeing $5 HGMCY, $20 NEM, or $1.50 KGC ever again... and that is to both - not buy any dips here and to ONLY buy into a breakout of prior resistance into new highs.
...gotta have a plan...and gotta stick to it...and you must exercise - Discipline and Patience above all else.
It takes experience to learn... I got my share of scarred fingers from catching falling knives from the '98 OSX cycle that continued to fall... learned quick and hopefully learned well.. as those lessons didn't need repeating and served me very well on both the next OSX cycle and this GOLD run.
I've learned that in Cyclicals - all I am ever interested in - is the High Reward - Low Risk ...BIG & EASY MONEY portion of the cycle.
NO one, is EVER going to consistantly time cyclical tops and bottoms - especially the fundamental tops and bottoms of the underlying commodities... but, what one can do; is to make pretty good sentiment calls on both complete and utter capitulation and disdain and ridiculous euphoria.
We've seen both.
The Nat Gas parabolic run up off the California crisis - was a euphoric sentiment top... and $255 GOLD and XAU 45/HUI 60 were sentiment capitulation levels as well.
Neither were dificult to recognize and both were extreme tops and bottoms.
It's the transition periods that are tough to call... and that's when to step asise and reassess imho....and that's where we are at right now...a TRANSITION period in this cycle.
And imho, the only High Reward - Low Risk Money remaining in this cycle; is going to be made under HUI 90 and over HUI 150... that's my take...and that's my plan.
It might not work for you, but it works for me.
Understanding your own individual psychological and emotional makeup is a primary prerequisite in formulating and effective trading strategy.
I like to make leveraged bets during what I view as the "High Reward - Low Risk" portion of cyclical commodity cycles and to do so; I make plays on investor and media sentiment...ie: trading the traders... as a significant timing mechansism on all my entry's and exits.
We all can't trade alike - because we all don't think alike.
We don't handle stress alike.
I like to trade ahead of and out front of the market.
I like to trade in anticipation of - both sentiment shifts and sector rotation money flows... and NEVER in reaction to them.
That's what works for me... if it helps - so be it. If it doesn't... there's lots of bandwidth out here in cyberspace (VBG)~
Ciao~ |
