Alpha...

Market is down nearly 1% and I am down 0.5 to 0.8%.  That to me is still alpha.  And some gold stocks are green in colour!

But the market is dynamic... it can change again in the arvo and bring misery to me!

And then tomorrow, if there is some minor news, anything can happen.  At this stage, in the short term, there is no logic.  The tapering of QE2 is not a recent announcement so you wonder why the market is responding as though it has not heard it before.

POG

In the last year, whenever there is talk of the Feds tapering off QE2, POG will fall because there is less money to throw around.

But last night at Wall Street, when the Feds is adamant that there will be a USD$10 billion stimulus cut, DJI plunged... but the POG went up by another USD$12 per oz.  What is the logic now?   It goes to show that these so called financial managers do not use logic.  Often it is just a herd mentality.

Hence, while my portfolio will get hammered, at least it is unlikely to be as bad.  Well, I hope!

Doom-gloom boom-zoom

One day, it is doom and it is all gloomy.

And then, without any real big change in the world economy, it becomes boom and the share prices mostly zoom up.

Is there a logic?  Definitely NO!  I still prefer to buy when people are dumping for the wrong reasons...  People pay equity traders big money to play around with their savings.  Wonder why any would complain about my fees when I am looking after their life.

AVB and RRS

Just when I noticed how crazy the market is for selling off AVB when it announced a drilling result of 50+ metres of 3+% of Cu, it was perhaps a bit too late.  Today, someone with similar thought went in to buy AVB but at a higher price.  I will still leave my bid at 6.4c.

And I put in a bid for 2.1c for RRS based on the fact that BHP is entering into a exploratory phase in the Caribbean area for oil.  A little Aussie is already there!

Our market trend is heavily influenced by Wall Street.  I will just sit back and wait for my parcels as often the memory fades and people start doing silly things again by selling off stocks that they should accumulate.

RRS

Today, BHP announced it is going to explore the Caribbean area for oil and expect big finds like in those in the Gulf of Mexico.  Trinidad was mentioned...

RRS has been drumming the significance of its Trinidad And Tobago tenement and hinted at the possibility that it might be linked to the huge Venezuelan oil basin.  Yet, RRS share price has been falling and falling, partly because of failed exploration in Georgia and Puntland.

Market direction

There is no direction...

One moment, it looks like if you didn't buy recently, you are going to regret it.  And then next moment, if you didn't buy recently, then you made the right call.

One thing appears predictable.  When news are miserable, then the POG goes up.  With the gradual tapering of QE2, it appeared as though the POG is going to fall so low that it could be used as a substitute for iron ore!

So when the market returns on Tuesday, you have no way of predicting what will happen.  Wall Street opens of Monday but ASX will be closed so we can follow the Yanks, as usual.  But if POG does not fall, then I can expect some alpha, as long as my portfolios do not fall more than the ASX All Ords.

When the market is so unfathomable, I just sit mostly on the sideline.  Currently, I like NST for its good management.  And NEA has gone crazy in the last 6 months.  TON will continue to rise as more good drilling results are expected.  Market however is aware that development cost will be beyond a small company like TON.

NEA

Only a fool would suppose a stock that is taking on Google for maps.  Yet this stock has risen more than 6X in the last year.  Google service is free to the public but not to commercial users.  Nearmap is not free to anyone but provides a better service to the users.  It is more detailed, more refreshed and more relevant... hence its success.

I didn't choose it for that reason.  I just didn't get rid of it when it crumbled after its first business model failed.  When it first announced Nearmap acquisition, I thought it is mad.

With just one great model, it is now one of my most valuable stocks!  So the question is... to keep or not to keep?

TON

My best strategy for investing remains the ability to pick stocks with great prospect but are dumped by the market continuously after multiple good announcements.

Of course, if that commodity is not wanted by the manufacturers using it, then it is safer to keep a wide berth.  It is no good producing an ore that no one wants.

With TON, graphite is the new black gold, and finding new application in modern technology.  And many contributors have asserted that views; none has condemned it yet.

And with good drilling results, and a neighbour SYR has gone up a few folds, why anyone would want to dump TON stocks is beyond my comprehension.  But I am always willing to oblige.  Today, another set of good news but this time the market is very receptive to resource stock so there is a huge jump in its value.  Don't buy now, ie today; the market memory is very short and I expect it to dip again.

However, it does not always work because sometimes while you are accumulating the stock, suddenly the price of that commodity plunges.  A good example is ABU... but it is rising again.  A colleague asked me whether he should top up more.  I said no.  And the price went down a bit more.  However, it is starting to rise again!

Apha

It has been quite a while now that I have great alpha.  The resource stocks fell by more than 40% while the rest of the market went up by more than 10% in the recent year.

So when today, the market fell but mine went up by more than 0.4%, I thought it is about time!  But tomorrow everything could remain to the dumps again...  Even though China is not doing that well, I think commodities are starting to turn.  You cannot keep going down as mines will close.

NST

The management has been brilliant.  They took over a mine with little prospect and found more gold.  While it is producing gold, it found more gold.  But because the price of gold has been falling, gold producer became a dirty word.

Meanwhile, big gold producers are jettisoning their smaller operations so NST picked up more tenements... at very good price.  The market is starting to recognize how astute the management is.  Sometimes, when you buy a stock, you are actually buying good managers.  When I last topped up NST in May 2013, it went much further down.  Today, in spite of gold still hovering below USD$1300 per oz, I have gone into the green zone with my holding in NST.

While resource stocks will soon recover as global growth is expected to rise this year, China is predominant determinant of the ASX performance.  And there will be a lag...

TON

The resource sector has been abysmal!  Even with good news, hardly any investors want to buy in.  That is why I love stocks like TON.  Everything points to an eventual rise in the stock, yet it has been miserable performance until lately.

When good news and dumping were occurring concurrently, I did a spree of buying but I could not sustain in the presence of continual fall.  However, I have been vindicated.  All my top-ups in August 2013 after the first buying in May 2013 (following an attendance at Proactive seminar) were at 5.6c to 6.6c.  Yesterday, it hit 13c.

Everyone is telling me that graphite is the new black gold.  And its neighbour SYR has increased several folds in value following its discovery of graphite in Mozambique.  So why would its neighbour remain stagnant when it is part of the same belt?  And worse still, its share price dropped after drilling confirmed that the graphite is thick, good quality and quite extensive.  I love those dumpers!  I love it when the market ignores good news!