tyc:>
That is an interesting question, and one that I do not have as firm an answer for.
I cannot frame the question just for mining stocks or any group/sector of stocks. I use these ideas of Seligman in a general sense for all stocks and for interaction in business.
The question is one of traps. Does an over critical perspective (the pessimist) limit the potential to recognize opportunity? It is certainly a valid question. I would have to agree that it does impose limits and those limits will reduce opportunity and thus profits. That pessimistic philosophy may also greatly reduce losses, and capital preservation is paramount in this game.
My last line in my original post to Slan sums up my position. I'm a realist. I'm open to the positive potential of a huge and economically viable resource being identified and extracted (hopefully at a nice profit). Still, knowing that many juniors, for example, never get to the stage where it is economically viable to mine, I have to be cautious in my expectations of a high percentage of juniors emerging as winners.
Maybe a slightly pessimistic perspective is actually an advantage in terms of selection of junior miners. If I try to find (meaning in this context, I'm guessing) fault with the land, the management, the trend in value for the target resource, then maybe the few juniors that survive this scrutiny are worthy of a significant investment/risk.
On the flip side it is very probable that I will miss many good opportunities. My personal philosophy is to make fewer bets, make them larger, and win at a higher percentage. This is, for me at least, how I can make over 100 trades in the past 32 months with only five losers (losers being defined as trades I have closed and no longer have any position in). I could have made a lot more trades in this period, but I fear my win percentage would be much, much lower.
I don't have a perfect answer, but I have an answer that works for me and my risk acceptance/tolerance level.
Good Trading
TH |
