I can't believe half of 2013 is already over! Time sure flies and I've noticed that the older I get the faster it seems to go by. Not good! The market correction that has taken place appears to be just that - a correction. I think most of the damage has already been done given how rapidly pessimism has swelled in the shorter term trading indicators I track. For instance NAAIM sentiment shows active managers are only 34% long which is in the vicinity of where correction lows have taken place.The concern about "Chibor" which added downside fuel to the fire seems to be alleviated at least for now and I think this is the catalyst that sparked the bounce. Not sure if this bounce is the beginning of a sustainable upswing though (I have my doubts). My forecast for choppy markets in the months ahead seems to be on track. Meanwhile I noticed all the same losers on the yahoo message boards squeeling with delight while the market was dropping along with some of the usual permabear suspects calling for a big drop in the market. You know what? Do yourself a favor and delete any bookmarks you have for these jokers if you actually invest/trade the market. They have poisoned your mind. This is not to say you should never be bearish again, just find another way - find a method that will turn you bearish when it's actually the correct posture. Most of today's doomsters are simply broken clocks who have been singing the same tune for several years or even decades and so when a crash happens they look like geniuses. The truth is, if you followed their advice over time, you'd be in the red and maybe even broke. At the end of the day making or losing money is the ONLY thing that matters if you play this game which is why these guys should be totally ignored.
Gold has been getting hammered quite badly this year and I'm a bit surprised it hasn't been able to get a bounce bigger than the short lived ones it has had so far. Maybe we will finally get a big bounce soon soon but I wouldn't hold my breath. I'd like to know where all those "gold will do well in inflation or deflation" guys are now and I wonder how the doomer gold bugs like Schiff are preforming. They certainly know how to brainwash people into believing the end of world is coming and yet they and their followers must be taking quite a beating. I must say, I have no sympathy for miserable SOBs who lose money. Gold stocks are now closing in on the 2009 bear market lows and gold companies are scrambling to shut down mines and cut costs. Gold stocks have been hit hard by a perfect storm of cost overuns from the likes of the majors like Kinross and Barrick and now a free falling gold price. In fact, Barrick is now trading at where it was in 2001 when the gold bull market had just started! Wow! I can't tell you how many times I saw Barrick recommended on BNN by the "experts" when it was above $40. So, with gold stocks getting hammered so badly even with gold still comfortably above $1000, does this mean that the sell-off is overdone and maybe even over?When you have these conditions where the gold price still hasn't found a bottom and the companies are hurting, slashing payrolls and shutting down mines it's best to avoid the sector no matter how tempting for it usually takes several months for the dust to settle in such cases...sometimes years. Think housing. There will of course be tradable rebounds but they are often elusive and you know what? I used to be interested in such opportunities but as the years have gone by I have passed on committing my capital on ST speculative endeavors like this. I'd much rather look for situations where I can buy a fundamentally strong company trading on the cheap which therefore gives "substance" to my positions or bet on some LT secular trend that I believe is its early innings. Bigger and easier money is made this way and in such situations I can have the conviction to make large bets whereas I can only bet small when I'm looking to "play a bounce" in some sector.
So far I've had a very good first half of the year but I gotta say, it's a bit unsatisfying because it's all due to my holding of gre.v while hwo.to has been stuck in a rut and is flat on the year. The company just announced a 3 year renewal of the big contract it has in place with its customer in PNG. This customer accounts for the bulk of the company's revenues and so it pretty much guarantees significant cash flows for 3 years and when you're trading at sub 4 times earnings, close to book value, no net debt and with a 7% yield, it makes the stock quite a bargain even though the company did say it expects flat EBITDA this year.There is this one huge seller of the stock out of UBS who continues to keep a lid on the stock putting up a brick wall at 2.10. This guy has sold over 1 M shares so far this year which is huge overhang for a microcap. If not for this big seller the stock would be a lot higher because anytime he's not there the stock lifts quite easily. I've been trying to find out who this seller is but I've had no such luck. It's not any insider otherwise it would show up on the insider trading report. Maybe it's a former insider. It's really frustrating to see this action in hwo but in time, the fundamentals always assert themselves and so the stock should work higher but in the meantime its been dead money and I don't like dead money. If I see something else equally enticing out there I might as well just pull the plug and move on.
Greenstar on the other hand has done quite well for me so far this year. Interest in the company is slowly building. When I was buying shares at .50 I was literally the only one buying. Although the company operates out of China which is struggling right now, most of its business is international and the domestic part of it involves the sale of fresh produce which is always going to have steady demand rain or shine. With significant growth pretty much baked in the cake for the next 2 years and stock still trading very cheap, the upside momentum seems poised to continue. The dividend is likely going to be hiked as well sometime down the road too given that it's only a tiny slice of cashflows which are growing. So far mgmt has done a good job in trying to separate the company from the bad image Chinese stocks have thanks to Sino Forrest and some others.
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