This Week’s Commentary – June 30, 2007 – Let’s Hope for A Better Second Half of the Year

by JDH on June 30, 2007

Well, we are half way through the year, and it is not a pretty sight.

I was up approximately 10% at the end of each of February, March and April. By the end of May I was down 2%, and now I am down 9.7% on the year. It is not fun to spend half a year working, only to lose almost 10% of my portfolio’s value.

However, I am not yet ready to jump off a bridge. Here’s why:

First, there are no bridges near me, which is good news.

Second, let’s put this in historical perspective. At the end of April, 2006 I was up 50.4% on the year. By the end of June, 2006 I was only up 6.9% on the year. That means that in two months last year I lost 43.5% of the value of my portfolio. 41% of that 43.5%, in other words most of it, came in the month of May.

To repeat, last year my portfolio dropped by 41% in one month.

By the end of August 2006 I was up 19.2%, but by the end of September I was only up 6.1%. Lest we forget, last year was also volatile.

Why I am bringing up such bad news? Simple. By the end of October, I was up 42.2%, by the end of November I was up 72.5%, and by the end of December I was up 94.3% on the year.

Now obviously this year is different than last year. I didn’t have a 50% gain going into the month of May to allow me to weather the storm and still come out in positive territory. I started May only up 10.9%, so obviously a drop of 20.6% over two months will put me down almost 10% on the year.

To put this simply, last year the “spring run off” cost me 43.5%; this year it has cost me 20.6%, less than half as much. Obviously I’m not happy about this, but looking at it historically, I don’t see this as the end of the world. It looks bad day to day, but I have been through this before, and have lived to tell the tale, and profit handsomely.

No bridge jumping today.

(As an interesting sidebar, this has been a very volatile week; we are all waiting for the downside or upside break out to happen. As a result, this was the busiest week for activity and number of hits on the Buy High Sell Higher Forum, so obviously we are all paying close attention to the market’s comings and goings).

Third, I think there are some obvious bargains out there. For example:

CXX.V – Crosshair Exploration & Mining Corp. is looking really good; see my detailed comments, and a chart. Also, TVC.V – Tournigan Gold Corp. is looking like it is at a good buy point.

Fourth, historically, summer is a good time for uranium stocks. Not a great time like the late fall and early winter, but a good time. As mentioned in previous weeks, I plan to buy selected producers or near producers and move towards a fully invested position, and then start taking money off the table later in August.

However, as you can see from my portfolio list below, while some stocks have bottomed, many others are still not at attractive buy levels. I think that means we will have more volatility in the next few weeks, so I will not be fully invested for a few weeks, I assume.

Finally, for all of you non-Canadian readers, Monday is a holiday in Canada. (July 1 is the anniversary of the forming of the Dominion of Canada on July 1, 1867; when I was a kid we called it “Dominion Day”, which is what I still call it, but officially it is now the un-imaginative “Canada Day”). With the American Fourth of July holiday also this week, volumes will be low, but that may make for some volatile swings, which may present some nice buy points.

Happy Dominion Day.

Here my updated portfolio and watch list:

  • AXR.TO – Alexco Resources Corp.1% (wait to buy) – It would appear that bottoms were made on May 25 ($5.15), May 30 ($5.15), June 26 ($5.14) and June 27 ($5.15); Alexco closed on Friday at $5.29, but only time will tell if $5.15 is the base; the prudent move would be to wait until it closes over $5.50 so that we have confirmation that the downtrend since the high of $6.69 on February 26 has been broken.
  • AQI.TO – Aquiline Resources, Inc.1.5% – The year long chart shows an obvious uptrend starting in January, which is more than I can say for many other stocks, so this one is a buy, right now.
  • CCO.TO – Cameco Corp. 0% – I know it’s a blue chip, and I know all of the analysts are raising their targets and recommending it, but I just can’t bring myself to buy a stock where the freakin’ mine is flooded!
  • CHX.V – Cash Minerals Ltd. 2% – it’s beaten down, but looks like a bottom has been reached, so I’m slowly accumulating.
  • CXX.V – Crosshair Exploration & Mining Corp. 2% – looks like it is at a great buy point; see my detailed comments, and a Crosshair chart.
  • DML.TO – Denison Mines Corp. 4% – PRODUCER – they are a producer, but they are on the acquisition trail, which has put down-ward pressure on the stock; I have down-graded it to 6% of the portfolio, and I will keep watching to see if it has put in a solid bottom; no buying until we know that a base has been established.
  • EDR.TO – Endeavour Silver Corp.2% – silver producer; beaten down recently, but I’m still holding.
  • FIU.TO – First Uranium Corp.2% – CLOSE TO PRODUCTION – Has pulled back from it’s high; I have been waiting to buy; $12 looks like a good buy point, so I will be putting in some buy orders this week (yes, I know I said that last week, but I still mean it).
  • FSY.TO – Forsys Metals Corp.4% – ADVANCED EXPLORATION – I do own it, and I like it; I may increase to a 6% weight as it moves up, primarily because I want higher weightings in stocks that are close to production, and therefore slightly less speculative
  • FRG.TO – Fronteer Development Group Inc. 8%ADVANCED EXPLORATION (through it’s ownership of AXU.TO – Aurora Energy Resources, Inc.); solid near blue chip stock, also appears to be at a good buy point.
  • GEM.V – Pele Mountain Resources Inc.4%ADVANCED EXPLORATION – chart looks like a bottom has been reached; good things expected to happen in the future as they get closer to production, so I have started accumulating
  • GBU.TO – Gabriel Resources Ltd.3% – Gold producer; you can read more details from my notes on June 1
  • JNN.V – JNR Resources Inc. 1% – Last week I said: “It’s been beaten down recently, but appears to have made a bottom, so time to start accumulating; I will be buying more at the $2.60 to $2.70 level, but it’s a junior exploration company, so it won’t be a big component of my portfolio” – it still looks beaten down, and I don’t see a bottom yet, so it’s too early to start buying.
  • KRI.TO – Khan Resources Inc.2% – CLOSE TO PRODUCTION – I have been watching this one for a long time; it got ahead of itself, but has now pulled back to reasonable levels and has started to rise; they are close to production, which fits in with my revised approach; I don’t yet own it, but plan to put in buy orders around the $4.30 level, which will be confirmation that the down-trend has ended.
  • LAM.TO – Laramide Resources 2%ADVANCED EXPLORATION (which is why it’s in the portfolio), but it has been beaten down recently, so I have reduced it’s weighting; I will increase in the future once it’s clear that a bottom has been reached.
  • MGA.TO – Mega Uranium Ltd. 2% ADVANCED EXPLORATION (which is why it’s in the portfolio), but it has been beaten down recently, so I have reduced it’s weighting; I will increase in the future once it’s clear that a bottom has been reached (kind of sounds like my LAM.TO – Laramide Resources comments, doesn’t it)?
  • PAA.TO – Pan American Silver Corp. 8% – It’s not clear that a bottom has been reached, so I may be over-weighted on this one, but silver stocks should move up from here, it’s a solid blue chip stock, so I’m holding
  • PDN.TO – Paladin Resources Limited 6% – PRODUCER (at its recently commissioned Langer Heinrich mine in the southern African state of Namibia) – production is not meeting expectations (see Forbes article); the $7.30 level is probably a bottom, so I’m keeping it in my portfolio, and I am only weighting it as high as I am due to it’s producer status.
  • PNP.TO – Pinetree Capital Corp. 4% – Chart looks terrible, hopefully $9 is the bottom; I have downgraded it to 4% of the portfolio, and will increase it’s allocation in my portfolio if circumstances warrant (ie. it starts to go up). At some point our friend Mr. Dines will tell us to back up the track, so until then, I hold.
  • PWE.V – Powertech Uranium Corp.4% ADVANCED EXPLORATION I hope a bottom has been reached, so I have started accumulating. Due to it’s advanced exploration status, I will be buying until I get to around 4% of my portfolio (currently only 1%).
  • PXP.V – Pitchstone Exploration Ltd. 1.5% – Junior explorer, I’m holding; an entry point is probably around the $3 level to confirm an upside breakout.
  • SMD.V – Strategic Metals Ltd.3% – This is one of my non-uranium holdings, but since it has broken downwards through support at 80 cents, I am reducing it’s weighting in my portfolio.
  • SLW.TO – Silver Wheaton Corp.1.5% (but not yet) – Silver stock, obviously, with good financials; however, the stock is very volatile, so I plan to put in a buy order at $12; if it gets filled, great, if not, I wait
  • SSO.TO – Silver Standard Resources, Inc. 7% – Solid silver stock, long-term holding, has been beaten down but a bottom appears to have been reached, so I’m holding.
  • SXR.TO – SXR Uranium One, Inc. 4% – PRODUCER – They are a producer, but the stock has been declining, so I am under-weighting it until the situation resolves
  • TVC.V – Tournigan Gold Corp. 4% ADVANCED EXPLORATION – This is a uranium stock, not a gold stock, and the chart looks good, so I’m beginning to accumulate
  • UEX.TO – UEX Corp.4% – ADVANCED EXPLORATION – Chart looks good, and I want to own companies that are close to production.
  • URZ – Uranerz Energy Corp. 2% – CLOSE TO PRODUCTION – Not sure if a bottom has been reached, so I have not started buying yet, but it’s a virtual blue chip company, so I will start accumulating once the bottom becomes more apparent.

As always, please leave your thoughts by posting a comment below, or on the Buy High Sell Higher Forum.

Thanks to all for reading and contributing, and have a profitable week.

{ 2 comments… read them below or add one }

az June 30, 2007 at 8:37 am

Great work , and that you for the for the information.
Can you please run a competition on your site by asking your members to choose one stock they recommend to buy for the year ( for this year we start from July ).
By end of Dec. we can find out who is the winner ? ( one stock only please ).

gadge78 July 5, 2007 at 11:42 pm

just looking at your portfolio… have you sold CMK then?