How to Invest With $5,000 to $10,000 - Revisited

By: Dudley Baker | Tue, Feb 10, 2009
Print Email

Perhaps you recall about one year ago we had a serious of articles, How to Invest....

We can all agree it has been one hell of a year so we thought it timely to revisit our previous article and see what new light we can shed on your investments decisions. Many of you have lost a substantial amount of monies over the last year, however we encourage you to look at the bright side in that now with the market for the junior's and smaller exploration companies down substantially, your investment dollars allow you to purchase more shares at the current depressed prices.

We feel your pain and frankly we have taken a bath ourselves on some of our positions, but we are confident in the coming months and next few years that all of us investing in the natural resources and commodity sectors will richly rewarded. This is the time to take a calculated risk with some of your investment dollars.

We realize not all investors have 'deep pockets' to invest and we suspect many investors are intrigued with the natural resource sector but all too often hear only of the large companies, i.e., Newmont Mining, Barrick Gold, and Agnico-Eagle. You might assume that it takes a lot of money to invest in this sector with the current share prices of these companies. Quite the contrary.

In our first article published in March 2008, How to Invest With $5,000 to $10,000, we cover the definitions for warrants, options and LEAPS and explore the use of all three as possibilities for investing. We will not repeat ourselves in this current article and encourage you to revisit our original article for some background information.

With the current market environment, many options, LEAPS and warrants are trading for pennies, yes just pennies, but of course we are partial to the long-term warrants with remaining lives of over 2, 3 and 4 years and longer. The opportunities with some of these long-term warrants on companies which we like are staggering and could easily, in our opinion, reap gains of 500% and more. True, not all of the companies with warrants trading as well as many other small exploration companies will survive.

Proper money management and allocation of your investment dollars is critical to your over all success. So let's explore a few ideas for you.

With $5,000 we would suggest you allocate this to four different investments. While this may not seem like much to many of you, remember, we are striving for gains of 500% and more. So many of juniors and warrants are at give-a-way prices and offer us these unusual opportunities. Current prices of $0.10 or $0.20 allows you to buy 5,000 to 10,000 shares or warrants, if not more for each of the four positions.

If you have $10,000 to invest we would suggest you allocate this amount to 5 different investments. Remember, we realize that one or two of these 'might not' work out so we must diversify even with this relatively small amount of money.

You say you do not have any monies to invest. I challenge you to review your portfolio and perhaps make some difficult choices. Frankly, we disagree with some of the analysts recommending selling positions which are trading only for pennies. A hold would be a wiser decision we believe as many of these companies will come back allowing investors to recover their investments. Yes, you may raise some monies by selling but the amount after commissions may not be worth the effort. We suggest that all investors periodically review their holdings and make some decisions. Remember, we are looking for 500% gain and if you feel your current holdings do not offer this potential return, perhaps you should sell the position and move-on to more promising investments.

We'd like to rap this up by showing you a chart of the TSX Venture relative to gold which gives us a good picture of just how bad the juniors and explorations companies have performed in the last year. It looks to us like it is time for the juniors to start out performing gold.

For those readers liking more information on warrants on our other services, encourage you to visit our website for additional information.



Dudley Baker

Author: Dudley Baker

Dudley Pierce Baker
Founder/Editor - Guadalajara/Ajijic, Mexico
A Market Data Service for Warrants

Dudley Pierce Baker is the founder and editor of Common Stock Warrants and its predecessor, Precious Metals Warrants and a 1967 graduate of St. Mary’s University in San Antonio, Texas with a major in accounting.

Disclaimer/Disclosure Statement: is not an investment advisor and any reference to specific securities does not constitute a recommendation thereof. The opinions expressed herein are the express personal opinions of Dudley Baker. Neither the information, nor the opinions expressed should be construed as a solicitation to buy any securities mentioned in this Service. Examples given are only intended to make investors aware of the potential rewards of investing in Warrants. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions involving stocks or Warrants.

Copyright © 2005-2016 Dudley Baker

All Images, XHTML Renderings, and Source Code Copyright ©