Have seen too many examples of people losing fortunes on once high flying great hero stocks that have since come crashing back down to earth.
KZL ROC NXS PLA AXM AED BSM MMX FXR CVN NDO MAE NAV BCD the list goes on and on and includes many blue chips too
There is a pattern here that can be identified if you keep it simple
First if the high flying stock your in starts to encounter problems with its producing assets this is the first worry
Second the longer this goes on the more likely that to make up the profit shortfall capital raising after capital raising will be required
Third be scared of debt as in this situation negative cash flows, falling share price and increasing dilution debt may be the straw that breaks the camels back
So i guess the warning I would give is be very wary of a company whose producing assets start to underperform and struggle.
I'd also say its better to stand to aside and wait to see if a company can actually turn it's fortunes around rather than jump in and try and catch a 20%-50% bounce while risking who knows how much down side or even bankruptcy
To counter the Heros becoming Zeros plenty of once zeros have now become heros
SXY DLS BRU NSE LYC SSN AYN MAD SFR BTR CDU GRY NST SLR PEK I'm sure there's many more
From this list a few companies such as SSN AYN were once struggling producers who so far have managed to turn their fortunes around. MAD DLS SXY have been a combination of improved production but also sector shift
NST SLR have been very successful gold producers
BRU GRY PEK SFR BTR CDU have had big exploration successs
It seems you run far less risk backing a spec exploration company so long as its got enough funding, is targeting a large enough resource and happens to be chasing a sought after commodity.
