Stock Values

Would you pluck out a feather from a bird to determine how it flies?!!

IAG, the gold stock I wrote about is down 2.5% at the moment. As I mentioned at the time, it was a speculative hedge made ahead of the previous meeting of FOMC and of earnings announcement. Hedge is intended to be used as insurance, in case something happens that you are not generally planning for. In this case, it was a hedge against FOMC lowering interest rates, which they (thank G-d) did not do! Also, IAG did not achieve their production goals in time, but have made significant progress since. With every factor (increased demand, higher production costs, lower reserves, limited production) pointing to higher gold prices, it is now only a matter of months before gold will make a significant jump. In any case, I am holding on to IAG.

I am curious though, why some critics choose to always concentrate on the one under performing asset in any portfolio, while ignoring the full picture? Is the fact that my portfolio beating the market and is doing it with less risk somehow less significant? Yes, I am human and can make mistakes, but some purchases I make are intended to be calculated risks. Some of these risks work out while others do not. That's normal and part of any sensible strategy.

Was GCH going up something like 10% in less than 2 weeks after I wrote about it was somehow less significant? What about BHI that I sold for a 20%+ profit within 2 months?

Now, please, allow me to tell you a short story.

At the end of August 2001, I employed a financial adviser and asked him not to make stock purchases for my account until I told him it was time. My plan was to go shopping in October. Well the money hit the account on September 6th or 7th and he went shopping right away with half that money and then 9/11 happened... Obviously, he made a big mistake not listening to my wishes, but you can't blame him for not knowing 9/11 would happen, can you? There is no way anyone could have planned for that tragedy, other than to have some short hedges just in case. Of course he didn't do that. In his attempt to diversify, he also made small purchases for my account, where round trip commission alone ate up 2% of the principal invested. That was also against my wishes and a mistake. Some of the stocks he chose to purchase for my account never made any sense to me (and have performed terribly both short and long term), but he did not pass them by me prior to making those purchases, like I had asked him to do. Another mistake. I gave the guy a chance anyway and paid him his fee for the year, but needless to say no longer employ him. Remember, this was a professional with decades of experience getting paid for making all these mistakes and I am just an amateur learning my ways around the financial markets. And you know something, so far I have done much better than him and most other advisers that I track.