lack of understanding, page-7

morning,

"Hi Paul 13,
The question you pose is, - when to sell and turn the cash into another non paper asset- There will most likely be some historical clues...one such clue that I have read is when gold is at its highest real estate is at its lowest...Juju"

I don't know if Paul was posing that question - but it sure is an interesting question and is one that if answered incorrectly is going to leave a lot of very sad faces for current fml shareholders.

I do not believe there is a firm textbook answer to this because I believe that each financial/economic catastrophe is different and many other variables are different - eg.

if someone were old enough to have lived through a recession/ depression at say age 30 years and successfully came out of that crunch with say 20 or 30 houses - then that might be fine -- however if someone did the same at age 70 - then having such an amount of residential real estate could be a right pain in the butt.
The NAB the other day asked me if I was interested in more investment properties -- just as well the question came from a cute young woman - I told her I needed another property like another hole in the bum.

There are 3 main considerations for exit as far as I can see --------------

1. Is the current asset market near or at a top (be it physical gold or gold stocks in general.
2. If this is the case then what the hell can you divert those assets into.
3. If one is talking about physical gold - then that is a far easier decision that if one is talking about an individual company like fml - gold is a lump of metal, a commodity - but fml is a dynamic living thing - capable of massive change on an almost daily basis - that's why we can get huge leverage out of a gold bull run and that's why we can wither and die on the vine even with a high gold price.

imo an answer to the question of when to exit something like fml and what to divert the wealth to is

1. It should be reasonably easy to see when the general gold index has peaked - assuming one isn't interested in hitting the bulls eye.
2. It should be reasonably easy to see when fml has run it's major race - ditto for the bulls eye.
3. There will be a complication and it is this - has fml built the company such that it can continue for a future way past a peak in gold and also has it diversified into other markets - also - does it pay a solid reliable sustainable dividend stream -- this could make ALL the difference to an exit ------------- an exit may not even be necessary at all if it is done correctly.
4. Should one choose to exit all or part of a holding - what should one diversify that wealth into -------------

impossible to answer in my book until one knows a. what is happening at the time and b. how much are we talking about?
Big big difference if we are talking about diversifying say $250,000 or if we are talking about $50,000,0000 -------

$250k is a far smaller problem - buy a boat and go fishing.
$50m -------- hmmmm, you would have to be looking at a broad range of investments across many territories I suspect - pain in the bum but hopefully can still be fun.

Now for those who think that figures of $50m aren't possible - well think again - there are individual shareholders with many millions of fml shares on the book right now - and several with over 10 m.

Factor in growth of say 100 to 200 % under normal business practice and factor in a continuation of the existing gold bull for a couple of years and then heaven forbid factor in at least one elephant of say 50M oz.

Is a shareholder with 5 to 20m shares going to have some thinking to do in that scenario?
What do you think?

Of course the above is only of import to long term investors. I have friends who I am sure if fml rerates to 20c in the next 2 months will indeed sell. Some of them will not re-enter at all but some of them will re enter when Dean comes out with bonanza dd results from TI in say 3 or 4 months - that day, when fml leaves a gap on the chart you can drive a truck through - say the sp is then 30c - some of them will put in a bid at 28c --- always chasing the apparent bargain - never wanting to pay what the market says that day - even though they could have held at 20 - then they will just keep chasing it up - eventually they will lose the previous profit ------------ pity, but in fact that's what most stock market participants are like ---
I feel for them but the reality is that I have built my position from people like that - I can't afford to question why people wanted to sell me fml at 5 cents a few weeks back - personally I think they are mad.

have a great day

Pinto