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Gold/Mining/Energy : Gold and Silver Mining Stocks -- Ignore unavailable to you. Want to Upgrade?

To: lbs1989 who wrote (1112)	5/27/2001 11:28:35 AM
From: russwinter	Read Replies (1) \| Respond to of 4051

<GLG> Just a good little company that is doing things right. But mostly it's that US listing: ease of transaction for US investors. In the scenario you present (not necessarily mine) of a powerful move to 400, I think you can throw darts and the eight baggers will turn out to be the laggards. So the key is to be spread out and diversify just in case one name blows apart (it happens in the sector) and significantly nullifies the rest. In otherwords you don't want to be right (about the move) only to lose out because a third of your portfolio is in a dog (not a judgment about the ones you now have overweighted, however). If you are worried about survivability of companies, focus on good balance sheets with excellent properties: SWG, FGX, FN, GLDR, IMG, SLR fits and really so does GBG. You are always going to have thin, peculiar markets to deal with however.

To: lbs1989 who wrote (1112)	5/28/2001 11:08:44 AM
From: que seria	Read Replies (1) \| Respond to of 4051

lbs 1989: Good luck recouping capital; been there and tried to do that. Here's a longer-than-intended comment on one thing you said that reminds me of what I used to: So the "trick" is can we come up with a portfolio after applying some sound judgement on the current available facts that will rise to a break even or above level* in a strong market?!!* I agree about aspiring to an 8-bagger but I've learned the hard way that trying to get back to even is a losing game. Prices are unconcerned with your break-even; at best they will go to or beyond resistance points in a bull move. If you're lucky one such point will be your sister's break-even. But given your statements that would have to be a big move. Since money will flow in and out of gold shares without regard for your sister's break-even, I would be very responsive to the tape and try to leg out of some shares over time if/as the market rises, even though she would start out taking losses. Selling a stock with a basis of $10 after it goes from $2 to $4 is the same on a cash basis as selling that stock at $12 that had just sat at $10. To me your starting point is the day you decide upon a plan, not the day her husband bought (except for tax purposes!) In the example above, in each case you've taken money off the table after a $2 move. In each case the issue is your confidence level the move will continue, and (independently of that) your risk management approach (loss cutting being as important as profit taking). I'd argue, unlike most on this thread, that in each case you should recognize and act upon the possibility (historically, for most gold share buyers, the probability) that you'll be wrong in just holding. I'd set stops after nice moves; keep the "gains." I'd say there's more reason to sell a gold stock that has just gone from $2 to $4, a double, than from $10 to $12, if you assume all market and company factors are the same. Of course they won't be, which underlines why it is market and company fundies/technicals that matter, not a break-even that will have only accidental connection to what would be a good sell point(s) from a fundamental and/or technicals perspective. I used to just hold gold shares in good story stocks, counting upon company/gold market fundamentals and the US debt pyramid to realize full value. Then I realized the gov't and bankers can keep the balls in the air a lot longer than I can afford to wait, so I cut gold shares from a portfolio bet to an insurance/speculative level. I think the biggest risk by far for your sister is in being out of tech in the still-early stages of it remaking the world-- not being in this or that gold stock (although I agree with nearly all of russwinter's points, as usual). So: I'd avoid an all or nothing approach, and take laddered losses (and ultimately, if we have a strong gold bull, gains) as price rises. Doing so will give cash to buy pullbacks, as well as tax offsets for LT gains on positions held to higher bull market points. I'd focus little if at all upon break-even for individual stocks or the portfolio, other than for tax purposes. Getting an improvement upon today's prices is the issue, because those prices are the reality your sister faces. Money lost on paper is gone today (you might--or might not--get some back tomorrow in her existing or other stocks). Selling 25% moves from today's prices does not cause a loss even if the basis is triple the sell price. Selling just recognizes the fact of the loss, respects technicals, confers a tax benefit, and allows you to redeploy money consistent with fundamental principles of diversification. I claim the opposite of sage status; I singed myself often enough to respect how little I know about the direction of stock prices. I avoid most big score bets to manage risk.