October 2006 Review

Again this week we see exposed the myth of markets rallying into options expiration Friday.

To those who say one cannot time the markets, we remind them of the Chinese proverb : "The person who says it cannot be done should not interrupt the person doing it."





In September of 2008 we posted our recap entitled How do we do? The August 2006 Review

Since that recap, we've since sold a 20th position of the 21 entries from that month, so we update the score for positions entered in August 2006 :

On the 20 positions we sold frm the month of Agust 2006 (out of 21 total entries) the average profit was 46% with an average holding time just shy of 8 months which implies an annualized gain of nearly 71% on closed positions.

Winners were 20 out of 21, breaking down to 16 out of 17 longs being profitable and 4 out of 4 shorts being profitable. That's a success rate of 95% and that's without even counting the very accurate calls on gold, silver, platinum, uranium, housing, the U.S. dollar, and the credit crunch.

Perhaps best of all, no quick trading required to achieve these results. All trades here are posted outside market hours, allowing for leisurely reflection and execution.

Note also this prophetic line, from that review posting in September 2008 : "The markets are moving as we've predicted, and the continued pathetic and irresponsible flailing of the U.S. "authorities" along with the continued falling of "dominos" such as Fannie, Freddie, and Lehman suggests to us our call for much lower markets will soon be proven correct."



We hope to recap a given month's entries after 2 years, thus allowing more than ample time for an idea to work. As evidenced by the average holding period however, we seldom hold positions for even a year. 2008 illustrated why we generally ridicule "buy & hold" ideolgoy, as will 2009.

We've fallen a bit behind on recaps, focusing instead on navigating these difficult markets, so since we entered no positions in September of 2006 we now finally recap October 2006.

In this review we add the relevant charts, from which much can be learned by those who think it safe to go long unhedged in any market environment especially the current one.



October 2006 Review


Long RC, RDM Corporation, at $1.77 We booked a 188% profit on this position 4.5 months later in Feburary '07. We effectively sold at the exact top and the stock now trades for $0.75

We wrote upon selling, near what would prove to be the start of the global bear market, "we feel this stock looks tired and expect it will not hold over the $5 level it currently enjoys, coupling this belief with our expectation of a general market pull-back along with our stated goal of reducing long holdings into the spring."





We also wrote at the time that "uranium continues to reach record high prices but related stocks have not yet made a new move upwards. We expect to see that resolve in the near future with uranium stocks making moves higher."

Long-time readers will know that one of the great equities booms of modern times occured in the months that followed in uranium stocks, which we rode to the very top luckily selling the majority of our holdings at the highs through 2007.

For example, on the same day we bought RC we also went long ALS.


Long ALS, Altius Minerals Corporation, at $6.88 We sold 6 months later in April '07 for a profit of 97%

As can be seen in the chart below, our timing could have been better but on the larger scale we did exit circa the correct time as the stock recently traded as low as $3.50 down almost 90% from the 2007 highs of $30




Long LRA, Lara Exploration Ltd, at $1.00 6 months later we sold for a 26% profit. The stock has since collapsed.




Long MAD, Miranda Gold Corporation, at $1.50 After 4 months in February '07 we sold for a profit of 13% Again very lucky, as the chart shows.





Long RFM, Rimfire Minerals Corporation, at $1.64 We sold this position 6 months later in April '07 along with a position we added in February '07 for a 9% gain. The stock began to plummet shortly thereafter.






Long SKV, Skygold Ventures Ltd, at $1.47 We sold that too 6 months later, in this case for an 8% gain. Same pattern in the chart.





In mid-October 2006 we wrote that "as of this writing, silver is at $11.57 USD per oz. We remain very bullish gold and believe this is an excellent entry point for silver." We don't even count this call as part of our "official" tally, though readers will surely appreciate that silver was nearly 100% higher just over a year later.





Long QTA, Quaterra Resources Inc, at $1.45 We booked profits of 108% in June '07, 8.5 months later. The stock would not go much higher before crashing.





Long BVG, Bravo Venture Group, at $1.27 We sold this 4 months later in February '07 for a loss of 1%. Merely a week later we'd have caught the spike that can be seen on the chart below and booked a profit, but after that the stock sold off nearly 90%





Long SSV, Southern Silver Exploration Corp, at $0.56 We also sold SSV for a loss 4 months later, this time a 3% loss. We could've done better, but not by much per the chart below.





Long FRX, Fortune River Resource Corp, at $0.43 This position too was sold 4 months later, for a 10% profit in this case. The stock did not go higher thereafter.




In mid-October of '06 we wrote that "currently we expect the general markets to run into the new year, perhaps after a shake-out pull-back of several hundred points in the DOW. In 2007 we fear dire consequences as the housing and credit economy collapses and markets turn sour. We will have added several short positions by then in preparation [...] we plan to be strapped-in for an economic hard landing."





Long URE, Ur-Energy Inc, at $2.92 At the start of March '07 we sold for a 57% profit after holding for 4.5 months. Again we sold at the exact high point.





Long TVC, Tournigan Energy Ltd, at $2.22 We profited 73% when selling 8 months later. Once again we sold at the top.





Long CVV, CanAlaska Uranium Ltd, at $0.43 We profited 26% 7.5 months later.





Long CXX, Crosshair Exploration and Mining Corp, at $1.96 which was an addition to our existing position in the stock. A month later we sold this additional position for a 66% propfit.





Long STM, Strathmore Minerals Corp, at $2.07 In mid-April '07 we sold this holding for a 130% profit after just 5.5 months. Yet again we luckily sold at the exact high.






Scorecard for October 2006

Of the 15 positions we entered, none were held longer than 8.5 months and the average holding time was just 5.5 months.

The average profit was 54% which implies an annualized gain of 122%

Winners were 13 out of 15, all longs. That's a success rate of 87% and that's without counting the very accurate calls on gold, silver, uranium, and the general markets.

Holders of U.S. dollars will consider that due to the U.S. dollar collapse we'd been predicting, which was partly the reason we were in Canadian equities, we enjoyed an additional 25% profit overall per the currency hedge.



We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or mentioning them in this blog. If we hold existing positions we divulge the fact, otherwise we generally buy and sell as diarized here. This blog itself is merely a diarizing of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

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