Rosey: "While you were sleeping: Global equity markets are down across the board for a third day running as the risk-off trade continues unabated; the U.S. dollar has broken out to the upside and gold is trading very poorly as negative technicals trump positive fundamentals."
Wow Mark. ZIP is just tanking huh? What's the deal with that one? People worried about competition? It's actually kind of interesting to me at these prices.
One of the ones I keep thinking is going to be a really good buy some time soon is Z. I love their site and use it all of the time.
2nd - Good to see you hopping on board. I'm thinking we're going to get our Santa Claus rally now. It makes sense to have had our dip first to scare people out...drop it below what people view as support at 1217 and then absolutely rip it higher.
My take is that while the markets may dip from time to time, we are still going to have a long term bull market...it might be really weak at times but I think there are several things favoring this:
(1) Corporations and govts are prepared for the next crisis because it's all everyone is talking about. Crises typically don't happen when people expect them to happen. (2) Corp cash balances and lack of hiring provides big buffer for any potential downturns and it will keep profits elevated for years (3) Housing is already in the dumps and can't really crash from here so there is no risk to a major downdraft there.
My thinking is we are probably in a 1930's style recovery. One where everyone is negative about everything yet where the world's economies continue to grow slowly. I suspect this whole weak period will pass and then people will get confident that we're not going into a recession....and then we get a recession some time in the middle of the decade.
Since Congressman Eric Cantor is working to block the Congressional ban on insider trading bill, perhaps we could send him an email asking for Congressional insider trades in realtime, or a daily basis:
11:56 AM "How many all-or-nothing gap up and gap down days can the normal human being watch occur in a row before they realize that the whole thing is (baloney)," writes Josh Brown. Evidently, no more as E*Trade and Schwab's latest DART reports show steep declines in trades, new accounts, and customer assets. "Normal people say (forget it) and stop doing anything at all."
So the reasons I’m getting so bullish on MITK are:
*Launch of Bill Pay by a tier 1 bank is imminent – the CEO stated this on the last CC *Addition of Progressive Insurance as first non banking customer > this really gets me excited. They have a VIN identification software app where from what I have read, if you get in a car accident you can take a picture of your VIN on your car and send it over to Progressive to begin filing a claim. I don’t know a ton about it but I think this could be a HUGE market opportunity for them. MITK has State Farm as a banking customer but I’m sure now that they have Progressive they will cross sell this to them and to other insurance companies. *Bringing more mobile deposit customers online > less than 1/5 of total banking customers are actually live. as more launch there should be a spike in revenues. *Price > Right around the 200 DMA and having dropped from $13 to $7.6, I think it’s a good time to buy the stock. On the chart I don’t see any evidence of a huge high volume selloff that might signal a big change in direction of the stock so I think the bull market for this stock is just taking a short term pause.
Why the White House and Republicans focus almost entirely on Wall Street.... http://www.ritholtz.com/blog/2011/12/measuring-the-financial-sector/
If you want the numbers to look good, no matter how bad it is for main street, you stick to the smoke and mirrors.
This may explain why Eric Cantor is trying to block the congressional insider trading ban. He wants to profit by stealing from his constituents. What better place than the largest part of the bought off economy?
"He wants to profit by stealing from his constituents."
Of course that's what he's been doing, along with a great majority of DC insiders. Just imagine if they were forced to treat taxpayer wealth as if it had been earned the old-fashioned way...
"How many people will stick around for even higher highs and puny yields? It's self correcting, isn't it?"
Clear Cut -- you are definitely right about the long term. But in the short term, I am afraid the market will remain irrational longer than I'll remain solvent.
If you look at the 2-year GDXJ chart, you'll see that it is touching now the lower boundary of the range in which it was trading between March and July 2010, when SLV was at ... $17 at GLD was at ... $110! Amazing!
PM's - Well, I didn't expect to catch the exact bottom but if they can push them on down a little more where price no longer falls every single day, I'll consider upping my position.
2nd_ave -- the S&P futures have once again ran up to the previous support level (yesterday's low) and then got rejected from that level. So far, we have a textbook picture of a downtrend.
David - Take a look at the 1990 market....I know it doesn't mean a ton right now but it at least gives you a sense of what the market can do. I'm pretty sure that on January 10th 1991 after the market dropped hard for a week and a half, people were thinking that they were in an unrelenting bear market. The market dropped really fast about 20%, rallied, then fell through through support. It then staged a big rally almost to the 200 DMA but failed. This brought a big drop in the beginning of the new year in 1991. I'm sure people thought the market was finished..the 200 DMA couldn't be conquered and the 50 DMA didn't hold.
Then the market rallied 25% in 1.5 months.
The market has a strange way of f*cking with everyone that looks too closely at the short term gyrations.
I hope you are right, TOF. I am not sure for how much longer I'll be able to remain solvent if the market keeps dropping (and takes AUMN down with it)...
TOF, I actually looked at S&P during 1990 and it does look amazingly similar to what we are having now: a new high in July, then a large drop in August followed by a lot of volatility on the bottom for 2 months, followed by a rebound in November-December above the upper range of summer volatility, followed by a pullback in early January 1991 (presumably what we had in October), followed by a quick 25% rally starting mid-January, which is what we should be having now, but we aren't...
Well, if the current pullback stops above 1160, then we could still call it a pattern of higher lows since October 4. But if 1160 is broken, then that parallel will not hold anymore...
The smart money is supposed to be very technical right now, right? This means that they should be buying the market now with an intention of rallying it back to 200 dma. Let's see if they can pull it off. If not, then it would mean they are getting screwed together with the rest of us...
The low in S&P futures today was below the lowest level seen during the late October to late November volatility at "the top." This should have hit many stops and greatly reduced the number of traders who are long. Let's see if this will be good enough to rally the market tomorrow...
Here is a possible explanation that we can get in 6 months for the crazy rally to above 1400 on S&P over the next 6 months: The mean "banksters" took a full advantage of the liquidity lines that ECB has offered them, investing that money left and right, mostly in equities.
After all, this is the kind of explanation we got in the summer of 2009 after a crazy rally since March 2009 -- it was caused by the Fed's actions in late 2008. So there was a few months of a delay before all that liquidity provided by the Fed found its way into the markets. The same delay can happen this time around too. So it is too early to conclude decisively that the latest European summit did not do anything to hold up the markets...
David - It takes patience to get through this period. My reference to 1990 is pretty simple but it's was a similarly traded market. The point really is that it's really easy to get juked out of the market moves. Just stay long and strong.
I'd be cautious about getting too long AUMN too quickly.
If I look at a Richmont Mines which has been one of the best performers in this rally, it took about 9 months to lose 75% of it's value in 2008 before turning around into a 10-bagger.
I could easily see this correction/bear in the PM's lasting as long or longer than the 2008 one as there are higher excesses this time.
If you have a decent position (which it sounds like you do), I would wait and see if you can get some really good prices on panic selling over the next several months.
I'm done buying MITK...I loaded the boat. Now I own 10% more than I owned before when I had the boat loaded! I was trying for a while to outrun the stock but all I needed to do was wait until it tanked with a weak market.
I'm perfectly fine waiting in MITK and dealing with the short term gyrations. A company with this much hype surrounding it's technology and surrounding the mobile document capture industry will not be worth $200 Million for long. I'm honestly shocked that Fiserv hasn't bought them out yet.
You guys are braver than me. No guts, no glory, but it looks like an inverted cup and handle/gate keeper to me. Me? I'm still sitting under water on NLS.... Not life threatening or anything, but mildly annoying. I like this one though...if it gets above the knock out bar. http://screencast.com/t/xNDo2hSn Look at that long term base w/cup and handle. oooooo la la.
Thank you for putting some sense back into me with AUMN, guys. I did realize today that it would be silly to convert the AUMN shares I own into options, as that would imply a very small chance of losing all my money, which is a pretty bad outcome. So I'll just keep scaling into the cheap July $5 AUMN calls, 10 contracts at a time, with a step of $0.25.
"If I look at a Richmont Mines which has been one of the best performers in this rally, it took about 9 months to lose 75% of it's value in 2008 before turning around into a 10-bagger."
AUMN has already lost 80% of its value since its peak one year ago -- does it mean that its time for it to turn into a 10-bagger? :)
CP, thank you for the link to Oppenheimer article!
Here are some quotes from it:
"Although it is unusual for bullion and gold stocks to diverge like this, with gold rising and gold equities falling, we have seen this structural set-up before. In fact, we’ve seen it three times in the past 28 years. Significantly, every time this divergence has occurred since 1983, gold equities snapped back in the following year, generating an average return of 36%."
"We believe these snapbacks occurred for several reasons. ... A stable or rising gold price in the “snapback year” gives investors greater confidence that higher prices will last for a while, which often prompts them to buy what has lagged (i.e., gold-mining equities)."
So GDXJ was lagging behind gold because a large correction in gold was anticipated. It seems that we are finally getting that correction now. So all we need is for that correction to stop, and investors will start buying the miners in bulk. So we may not be too far from the turning point.
Another interesting quote from the above article (which justifies the view that the current pullback is temporary in nature):
"Finally, gold tends to perform best during periods when the equity markets are moving sideways with high volatility, like the 1930s, the 1970s, the 2000s and this year. In light of the continuing sovereign debt crisis and fiscal problems in Europe, slowing growth in Asia and the inability of U.S. legislators to agree on almost anything (and with an election year looming), we expect the macro environment to remain favorable for gold in the near term."
David, the difference between AUMN and RIC is AUMN is a new company and new junior golds (and energy stocks) often come out to very high valuations and proceed to lose 80% or 90% of their value. I think it is a combination of management selling high and the fact that a lot of these new companies are just good projects and have a lot of work and funding ahead of them before they get into production and start generating income.
In the case of RIC, it has been around for 20+ years and it's value was low in 2008. It just kept executing on it's business plan and things went well that year, but it didn't matter and got dragged down with the overall market. The thing that was scary at the time was how hard it got hit for a company with good assets and reasonable revenues. I think because it was a small-cap, it just couldn't absorb the selling.
In the case of AUMN now, you've got the issue of a new company that probably sold equity high, a junior gold miner in a weak gold market and the project risks associated with bringing their large mine to market (and it is rare that these stay on schedule or budget). I agree that they've got a great resource and it is probably the cheapest silver miner out there on a NAV basis. My suggestion would be to keep an eye on the majors like Goldcorp. In 2008, they bottomed before about a quarter before the small-caps. It might be a good tell as to when to add to your position.
small cajones, i wanted to sell some cash secured puts but i just couldn't do it, CF down around $130 ish today.
bought 300 SSO at 43.34 with a stop around 42.82. USUALLY, I don't have a problem putting stops on SPY or SSO.
Items of interest to me, we started the day flat instead of a big gap up/down.
XLF was essentially flat on the day. I didn't realize that until I saw JPM was green which was a surprise.
WTI would be great if it just hung out in the 80-90 range for awhile. I don't think this was a currency trade today but I am worried if MF Global has anything to do with it.
I bet Iran gives China/Russia a chance to check out the drone.
Mark- Put the book down and watch both film versions instead.
ReplyDeleteRIG - I noted that Cramer worked-over RIG a bit in yday's show...
ReplyDeletehttp://www.madmoneyrecap.com/
Added some MITK at $7.62.
ReplyDeleteRosey: "While you were sleeping: Global equity markets are down across the board for a third day running as the risk-off trade continues unabated; the U.S. dollar has broken out to the upside and gold is trading very poorly as negative technicals trump positive fundamentals."
ReplyDeleteBad guidance from CAT/JOY
ReplyDeleteZIP still falling.
ReplyDeleteWow Mark. ZIP is just tanking huh? What's the deal with that one? People worried about competition? It's actually kind of interesting to me at these prices.
ReplyDeleteOne of the ones I keep thinking is going to be a really good buy some time soon is Z. I love their site and use it all of the time.
Added to SLW @ 28.86.
ReplyDeleteOpened small positions in AUMN + UXG @ 5.48 + 2.97...
Did one of my posts disappear? I opened a small position in SLW earlier at 29.19 as well...
ReplyDeleteBidding MITK 7.55/7.54...5K shares. Gl players!
ReplyDeleteAdding AA @ 8.91 + INTC @ 23.29...
ReplyDelete2nd - Good to see you hopping on board. I'm thinking we're going to get our Santa Claus rally now. It makes sense to have had our dip first to scare people out...drop it below what people view as support at 1217 and then absolutely rip it higher.
ReplyDeleteMy take is that while the markets may dip from time to time, we are still going to have a long term bull market...it might be really weak at times but I think there are several things favoring this:
ReplyDelete(1) Corporations and govts are prepared for the next crisis because it's all everyone is talking about. Crises typically don't happen when people expect them to happen.
(2) Corp cash balances and lack of hiring provides big buffer for any potential downturns and it will keep profits elevated for years
(3) Housing is already in the dumps and can't really crash from here so there is no risk to a major downdraft there.
My thinking is we are probably in a 1930's style recovery. One where everyone is negative about everything yet where the world's economies continue to grow slowly. I suspect this whole weak period will pass and then people will get confident that we're not going into a recession....and then we get a recession some time in the middle of the decade.
SPX 1209.85 = Fib (38.2%, 1292.66, 1158.67) about where we're at
ReplyDeleteSince Congressman Eric Cantor is working to block the Congressional ban on insider trading bill, perhaps we could send him an email asking for Congressional insider trades in realtime, or a daily basis:
ReplyDeletehttp://www.ericcantor.com/contact-us/
TRV/GS - The two single largest contributors to Cantors campaign fund.
ReplyDelete11:56 AM "How many all-or-nothing gap up and gap down days can the normal human being watch occur in a row before they realize that the whole thing is (baloney)," writes Josh Brown. Evidently, no more as E*Trade and Schwab's latest DART reports show steep declines in trades, new accounts, and customer assets. "Normal people say (forget it) and stop doing anything at all."
ReplyDeleteSo the reasons I’m getting so bullish on MITK are:
ReplyDelete*Launch of Bill Pay by a tier 1 bank is imminent – the CEO stated this on the last CC
*Addition of Progressive Insurance as first non banking customer > this really gets me excited. They have a VIN identification software app where from what I have read, if you get in a car accident you can take a picture of your VIN on your car and send it over to Progressive to begin filing a claim. I don’t know a ton about it but I think this could be a HUGE market opportunity for them. MITK has State Farm as a banking customer but I’m sure now that they have Progressive they will cross sell this to them and to other insurance companies.
*Bringing more mobile deposit customers online > less than 1/5 of total banking customers are actually live. as more launch there should be a spike in revenues.
*Price > Right around the 200 DMA and having dropped from $13 to $7.6, I think it’s a good time to buy the stock. On the chart I don’t see any evidence of a huge high volume selloff that might signal a big change in direction of the stock so I think the bull market for this stock is just taking a short term pause.
Why the White House and Republicans focus almost entirely on Wall Street....
ReplyDeletehttp://www.ritholtz.com/blog/2011/12/measuring-the-financial-sector/
If you want the numbers to look good, no matter how bad it is for main street, you stick to the smoke and mirrors.
This may explain why Eric Cantor is trying to block the congressional insider trading ban.
He wants to profit by stealing from his constituents. What better place than the largest part of the bought off economy?
Kyle Bass interview from this morning re Europe...
ReplyDeletehttp://video.cnbc.com/gallery/?video=3000061932
A preliminary copy of his newest Letter is out there somewhere, but here is the old one...
http://www.hedgefundletters.com/category/hayman-advisors/
"He wants to profit by stealing from his constituents."
ReplyDeleteOf course that's what he's been doing, along with a great majority of DC insiders. Just imagine if they were forced to treat taxpayer wealth as if it had been earned the old-fashioned way...
"How many people will stick around for even higher highs and puny yields? It's self correcting, isn't it?"
ReplyDeleteClear Cut -- you are definitely right about the long term. But in the short term, I am afraid the market will remain irrational longer than I'll remain solvent.
MITK - Holler at me if you guys happen to see $6.50, I'll take a stab at it. ;)
ReplyDeleteShort term? Isn't that like "a little while"? Oh (anxious tone here), but how long is a "little while"?
ReplyDeleteIf you look at the 2-year GDXJ chart, you'll see that it is touching now the lower boundary of the range in which it was trading between March and July 2010, when SLV was at ... $17 at GLD was at ... $110! Amazing!
ReplyDeleteMaybe the next US debt raiseup debate combined simultaneously with failing Italian bond auctions should coincide for an interesting response?
ReplyDeletePM's - Well, I didn't expect to catch the exact bottom but if they can push them on down a little more where price no longer falls every single day, I'll consider upping my position.
ReplyDeleteMy buy limit order for 10 AUMN July $5 calls was executed this morning at $1.50. Placing another buy limit for 10 such calls at $1.25.
ReplyDeleteTook it all off the table:
ReplyDeleteSLW @ 29.4x
INTC @ 23.5x
AA @ 9.1x
UXG @ 3.1x
AUMN @ 5.5x
Obviously, not feeling that bullish right now.
2nd_ave -- the S&P futures have once again ran up to the previous support level (yesterday's low) and then got rejected from that level. So far, we have a textbook picture of a downtrend.
ReplyDeleteThere is a daily Fib S1 = 1220.05 that it's working against
ReplyDeleteDavid - Take a look at the 1990 market....I know it doesn't mean a ton right now but it at least gives you a sense of what the market can do. I'm pretty sure that on January 10th 1991 after the market dropped hard for a week and a half, people were thinking that they were in an unrelenting bear market. The market dropped really fast about 20%, rallied, then fell through through support. It then staged a big rally almost to the 200 DMA but failed. This brought a big drop in the beginning of the new year in 1991. I'm sure people thought the market was finished..the 200 DMA couldn't be conquered and the 50 DMA didn't hold.
ReplyDeleteThen the market rallied 25% in 1.5 months.
The market has a strange way of f*cking with everyone that looks too closely at the short term gyrations.
Just read a note claiming the U.S. government has $145B in treasuries to roll tomorrow.
ReplyDeleteI hope you are right, TOF. I am not sure for how much longer I'll be able to remain solvent if the market keeps dropping (and takes AUMN down with it)...
ReplyDeleteWonder if that $145B will help nudge TBT a wee bit?
ReplyDeleteDavid - Santa keeps repeating that by the time the chips are down, there will be no margined capital remaining in the PM market.
ReplyDeleteTOF, I actually looked at S&P during 1990 and it does look amazingly similar to what we are having now: a new high in July, then a large drop in August followed by a lot of volatility on the bottom for 2 months, followed by a rebound in November-December above the upper range of summer volatility, followed by a pullback in early January 1991 (presumably what we had in October), followed by a quick 25% rally starting mid-January, which is what we should be having now, but we aren't...
ReplyDeleteWell, if the current pullback stops above 1160, then we could still call it a pattern of higher lows since October 4. But if 1160 is broken, then that parallel will not hold anymore...
The smart money is supposed to be very technical right now, right? This means that they should be buying the market now with an intention of rallying it back to 200 dma. Let's see if they can pull it off. If not, then it would mean they are getting screwed together with the rest of us...
ReplyDeleteThe low in S&P futures today was below the lowest level seen during the late October to late November volatility at "the top." This should have hit many stops and greatly reduced the number of traders who are long. Let's see if this will be good enough to rally the market tomorrow...
ReplyDeleteHere is a possible explanation that we can get in 6 months for the crazy rally to above 1400 on S&P over the next 6 months: The mean "banksters" took a full advantage of the liquidity lines that ECB has offered them, investing that money left and right, mostly in equities.
ReplyDeleteAfter all, this is the kind of explanation we got in the summer of 2009 after a crazy rally since March 2009 -- it was caused by the Fed's actions in late 2008. So there was a few months of a delay before all that liquidity provided by the Fed found its way into the markets. The same delay can happen this time around too. So it is too early to conclude decisively that the latest European summit did not do anything to hold up the markets...
On a down day like today, XLF is the strongest performing sector.Strange, huh? Any conclusions can be drawn from this fact.
ReplyDeleteDavid - It takes patience to get through this period. My reference to 1990 is pretty simple but it's was a similarly traded market. The point really is that it's really easy to get juked out of the market moves. Just stay long and strong.
ReplyDeleteTime to Buy, Buy, Buy!!!
ReplyDeletePrecther is coming up on CNBC!!!
David,
ReplyDeleteI'd be cautious about getting too long AUMN too quickly.
If I look at a Richmont Mines which has been one of the best performers in this rally, it took about 9 months to lose 75% of it's value in 2008 before turning around into a 10-bagger.
I could easily see this correction/bear in the PM's lasting as long or longer than the 2008 one as there are higher excesses this time.
If you have a decent position (which it sounds like you do), I would wait and see if you can get some really good prices on panic selling over the next several months.
Just got 2,303 shares @ 7.55 in a single block.
ReplyDeleteBidding 3000 more @ 7.48
ReplyDeleteBidding 1000 SSO @ 42.26.
ReplyDeleteI'm done buying MITK...I loaded the boat. Now I own 10% more than I owned before when I had the boat loaded! I was trying for a while to outrun the stock but all I needed to do was wait until it tanked with a weak market.
ReplyDeleteOn MITK?
ReplyDeleteCC- Yes, if that ? is too me.
ReplyDeleteI'm perfectly fine waiting in MITK and dealing with the short term gyrations. A company with this much hype surrounding it's technology and surrounding the mobile document capture industry will not be worth $200 Million for long. I'm honestly shocked that Fiserv hasn't bought them out yet.
ReplyDeleteYou guys are braver than me. No guts, no glory, but it looks like an inverted cup and handle/gate keeper to me. Me? I'm still sitting under water on NLS.... Not life threatening or anything, but mildly annoying.
ReplyDeleteI like this one though...if it gets above the knock out bar.
http://screencast.com/t/xNDo2hSn
Look at that long term base w/cup and handle.
oooooo la la.
Thank you for putting some sense back into me with AUMN, guys. I did realize today that it would be silly to convert the AUMN shares I own into options, as that would imply a very small chance of losing all my money, which is a pretty bad outcome. So I'll just keep scaling into the cheap July $5 AUMN calls, 10 contracts at a time, with a step of $0.25.
ReplyDelete13 shares!! 13 shares at 7.54 in another account? Crap!
ReplyDeleteTOF- I agree. I was just waiting for the market to pull back overall. MITK will get bought out, no question. It's just the time frame we don't know.
Just got an email from Traderwizard on chart pattern recognition. I wonder if GLD is an example.
ReplyDelete"If I look at a Richmont Mines which has been one of the best performers in this rally, it took about 9 months to lose 75% of it's value in 2008 before turning around into a 10-bagger."
ReplyDeleteAUMN has already lost 80% of its value since its peak one year ago -- does it mean that its time for it to turn into a 10-bagger? :)
BPAX- Sorry about that RB. I know you were counting on that drug.
ReplyDeleteBoone Pickens sold $14M worth of XCO the last 2 days. Wow, at these prices.
ReplyDeleteOppenheimer: Gold vs gold equities:
ReplyDeletehttps://www.oppenheimerfunds.com/digitalAssets/Focus-On-Gold-d3db5198-e1db-4ae2-8216-e71e4ee95be9.pdf?SID=100&AN=oppbrief_12/13/11&HB=HP1-3GFX4B&om_rid=D6MFaz&om_mid=_BO5zO3B8e7Q8iT&heartbeat_id=HP1-3GFX4B
AVAV is a strong looking stock....they make drones which is apparently a good growth industry for the military. Long term REV/EPS growth is solid.
ReplyDeleteXCO/Pickens -
ReplyDelete* Something wrong there?
* Perhaps management piss'd Pickens off?
* Some kind of conflict of interest?
* Cut your losers?
CP, thank you for the link to Oppenheimer article!
ReplyDeleteHere are some quotes from it:
"Although it is unusual for bullion and gold stocks to diverge like this, with gold rising and gold equities falling, we have seen this structural set-up before. In fact, we’ve seen it three times in the past 28 years. Significantly, every time this divergence has occurred since 1983, gold equities snapped back in the following year, generating an average return of 36%."
"We believe these snapbacks occurred for several
reasons. ... A stable or rising gold price in the “snapback year” gives investors greater confidence that higher prices will last for a while, which often prompts them to buy what has lagged (i.e., gold-mining equities)."
So GDXJ was lagging behind gold because a large correction in gold was anticipated. It seems that we are finally getting that correction now. So all we need is for that correction to stop, and investors will start buying the miners in bulk. So we may not be too far from the turning point.
Another interesting quote from the above article (which justifies the view that the current pullback is temporary in nature):
ReplyDelete"Finally, gold tends to perform best during periods when the equity markets are moving sideways with high volatility, like the 1930s, the 1970s, the 2000s and this year. In light of the continuing sovereign debt crisis and fiscal
problems in Europe, slowing growth in Asia and the inability of U.S. legislators to agree on almost anything (and with an election year looming), we expect the macro environment to remain favorable for gold in the near term."
David, the difference between AUMN and RIC is AUMN is a new company and new junior golds (and energy stocks) often come out to very high valuations and proceed to lose 80% or 90% of their value. I think it is a combination of management selling high and the fact that a lot of these new companies are just good projects and have a lot of work and funding ahead of them before they get into production and start generating income.
ReplyDeleteIn the case of RIC, it has been around for 20+ years and it's value was low in 2008. It just kept executing on it's business plan and things went well that year, but it didn't matter and got dragged down with the overall market. The thing that was scary at the time was how hard it got hit for a company with good assets and reasonable revenues. I think because it was a small-cap, it just couldn't absorb the selling.
In the case of AUMN now, you've got the issue of a new company that probably sold equity high, a junior gold miner in a weak gold market and the project risks associated with bringing their large mine to market (and it is rare that these stay on schedule or budget). I agree that they've got a great resource and it is probably the cheapest silver miner out there on a NAV basis. My suggestion would be to keep an eye on the majors like Goldcorp. In 2008, they bottomed before about a quarter before the small-caps. It might be a good tell as to when to add to your position.
small cajones, i wanted to sell some cash secured puts but i just couldn't do it, CF down around $130 ish today.
ReplyDeletebought 300 SSO at 43.34 with a stop around 42.82. USUALLY, I don't have a problem putting stops on SPY or SSO.
Items of interest to me, we started the day flat instead of a big gap up/down.
XLF was essentially flat on the day. I didn't realize that until I saw JPM was green which was a surprise.
WTI would be great if it just hung out in the 80-90 range for awhile. I don't think this was a currency trade today but I am worried if MF Global has anything to do with it.
I bet Iran gives China/Russia a chance to check out the drone.