Casual Investor, I wasn't aware we were debating whether diversification is a good thing, because I certainly don't advocate putting all your eggs in the same basket. I think that's what lawyers call a 'straw man' argument isn't it? You've made a weak argument on my behalf in order to shoot it down in a decisive manner... trouble is that it wasn't my argument at all.
You might have a finance degree, but you bought into Bannerman at a much higher price than I did, so not sure where you find the justification for lecturing me on sharemarket trading strategy. I have no university degrees, but have been a professional trader and have over 3 decades experience in the Aussie market.
I agree that there are many momentum traders like yourself, but that doesn't mean that they are a more successful group of traders than that minority who go against the crowd. In my experience it has been the other way round. Maybe we just move in different circles.
You've linked your comment about it 'not just being your trading method', to a comment about diversification, so I can only conclude that you do think I have somewhere recommended that people put all their life savings into Bannerman. Quite the contrary, my BMN holding is less than 1% of my sharemarket investment, and growing smaller :-)
My reason for the post about not losing all objectivity and for investing in Bannerman is that I know from long experience that the market overshoots in both directions. I regularly look for extremely out of favour companies (and sectors) with significant assets that in a market with better sentiment I can imagine being valued a lot higher, regardless of the immediate problems facing them. I then place a small bet that there will be some point when sentiment improves, and I am willing to wait.
By the way, I don't think having bad management is necessarily a reason to avoid a small bet. It is often the main reason that the underlying asset has been discounted greatly by the market. Minemakers or Nexus are good examples at the moment. If the underlying asset is good, management can change. You rarely find bargains that have no bones.
One poster sarcastically quoted my comment that I don't want to be an apologist for underperformance. They clearly can't follow the logic that you can think management are bad (as I actually stated) but still feel that a share price rout has been overdone. Pointing out that the price has fallen from 4.00 to under 10c has no relevance to my opinion that the current market cap is getting too low. If anything it illustrates exactly what I'm talking about. A person who is that disillusioned by what has already occurred (which I don't blame them for) will be critical of the stock at ANY price and the lower it gets the more critical they will become. That's why I would caution people not to lose all objectivity. The issue is always whether a stock is undervalued or overvalued at the current price, not whether it was ridiculously overvalued in the past.
BMN Price at posting:
9.6¢ Sentiment: Buy Disclosure: Held
