Morning Dan
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Would you measure the buying potential of a speculative stock based on it's ability to pay dividends or it's ability to make you a profit through the appreciation in the share price at various times?"
I think that's a very good question. What it does, I think, is expose the difference between traders / speculators and investors. I also argue it is the basis of many squabbles that break out on HC. Trader / speculators have a very different mindset to investors. If, I was an investor then the fundamental metrics would be that basis of my decision. Traders / speculators don't really care about fundamentals - although that can be good for trading as well. You know the, "
buy the rumour sell the news" type mentality.
https://www.thebalance.com/what-does-buy-the-rumor-sell-the-news-mean-1344971My position with CGB is based on my concerns over some fundamental aspects of the company. I struggle to see how so many are so positive given the history of this company. I have posted many times on that topic. However, it might prove to be a great trading stock when it resumes and that's a very different story that requires a very different mindset.
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Surely your dalliances in the speculative end of the market wasn't always based on robust profits?"
Mostly never! When I am in this part of the market I try and trade the momentum / swings i.e. "
buy the rumour - sell the news". I have one long term hold of a small cap mining company that has very good prospects - in my view. It has a low number of shares on issue - very competent board (I researched each member) - no related party transactions - recently entered into a JV with a big player and acquired a great tenement from BHP in the mining downturn some years back etc. However, if the price jumps I will trade out and buy back in when it slides back. You will never go broke taking profits. My goal is to be 'free carried' to the tune of 250k shares.
I try to be the person in the second sentence.
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When a positive news event comes out and the price rises, entering on that positive news release can potentially be the worst possible time to enter the market. That is the time when everyone else who bought the stock at the lower price may be getting out of the market to reap a profit."
Ok ... now to get some seeds into my next salad. Is there anything more interesting to put on the plate than seeds?
