Mongombolo, all investments carry risks.I bought FMG (which is...

Mongombolo, all investments carry risks.

I bought FMG (which is hardly a junior) only after Hunan Valin declared to take a 17% stake. From that point on, the company took on a different risk profile entirely.

Essentially, IMO then it couldn't go broke. The global atmosphere was so bad, Wayne Swan was also not in a position to say no to Hunan Valin buying an even bigger stake (should FMG hit the skids).

My formula to buying mining companies was to snap up anything with Chinese (japanese/korean to lesser extent) stakes, JV or those with little to no debt. An example was MMX (Chinese and Japanese interests) - as safe as Gibraltar.

When FMG hit almost $1, it had no Chinese ownership. In fact, the thought of MGX and OZL really spooked me. The negative sentiments allowed short sellers to massive short the FMG stock to hit that low. It didn't hit $1 because it was priced for bankruptcy. With hindsight, I wish I bought at $1 and now own twice as many shares. Then again, I probably would have had a heart attack enduring the last quarter of 2008.

The GFC saw a massive flight to safety from small-mid caps to RIO/BHP/ANZ/NAB/WBC/CBA making up about half of the ASX in an extreme knee-jerk risk aversion panic. Just about every junior minor, materials, mining engineering company share price came down 80% to 95%.

Now the reverse is happening.