Every night my wife and I read to our boys. I’m currently reading the final of thirteen books in A Series of Unfortunate Events by Lemony Snicket. The final book is appropriately title The End (and after reading about 170 chapters, I am looking forward to the end). I find the books annoying, because the writer spends most of each book going off an wild tangents. In Chapter 5 he starts discussing peer pressure, and makes what is one of the most insightful asides in any of his books:
“All day long, everyone in the world is succumbing to peer pressure ……… and the trick is to succumb to enough peer pressure that you do not drive your peers away, but not so much that you end up in a situation in which you are dead or otherwise uncomfortable. This is a difficult trick, and most people never master it, and end up dead or uncomfortable at least once during their lives.”
(My son then proceeded to ask me how you could end up dead more than once in your life, so perhaps yet again the children are more insightful than the adults).
We are all “peers” with everyone else who invests in the stock market, and every day as our peers buy and sell stocks, we feel the pressure as prices increase and decrease. As prices rise we we feel pressure to buy, because we don’t want to miss our on a good thing. As prices fall, we feel the pressure from our peers and assume they must be right, and we also think about selling.
(Of course our peers can also have keen insights; just read my post from January 25 about Mega Uranium).
In 2006 our peers pushed the price of uranium shares higher, and we went along for the ride, and made a lot of money doing it. Then the consolidation in the first two weeks of 2007 made us question whether or not our peers were right, and it was time to sell.
Over the long term our peers will decide what all shares are worth, but in the short term our peers may be wrong, buying when they should be selling, and vice versa. A look at many charts, such as the chart of PNP.TO – Pinetree Capital Corp. reproduced below, shows that the long and medium term trend remains up, regardless of what our peers may say. Most of our uranium stocks look the same.
I am happy to report that as of today my portfolio is down less than 1% on the year, which is a big improvement from the 10% I was down earlier in the month. I have not let my peers pressure me. Uranium and gold stocks are fundamentally sound, and I see no reason to deviate from my plan. We are nowhere near a top, the uptrends on our stocks remain up, so I remain fully invested.
As always, feel free to post your comments below, or on our Buy High Sell Higher Forum.
{ 2 comments… read them below or add one }
Speaking of PNP and the fate of the Uranium market. I have currently discovered Longview Capital, ticker LV. It looks strikely similar to PNP at an early stage. I am a believer in the commodities and uranium market and thus am considering an investment in LV. I would appreciate your thoughts.
Thanks
Marvel
I don’t know anything about the Longview Capital, but I took a look at the chart, and I don’t like it. I’m biased, because I follow a buy-high-sell-higher philosophy, meaning I like to buy stocks when they make a high for the first time. Clearly LV.V is not making a new high.
In fact, the technical analysts would say that it has just completed a head and shoulders formation (with the head around the beginning of January, and the shoulders in mid December and mid January. The “neckline” of this formation has been penetrated, which is generally bad news. I would postpone buying until it gets down below $1.20, and then shows that it is rising again.
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