Managing Your Investment Expectations
In all aspects of our lives we need a plan, an objective or a roadmap for managing our expectations. This extends to our investing and financial objectives as well as expectations and challenges of dealing with family issues. Here we would like to chat about investor's expectations, especially those investors in the natural resource sector.
All investors must decide whether you are investing for the short term vs. the long term. For purposes of explanation, let's define short term as 1 year or less and long term as over 1 year.
- Gold Bullion/Coins - Silver Bullion/Coins
- Mutual Funds - ETF's (Exchange Traded Funds)
- Shares of Mining Companies - producers or exploration companies
- Options, LEAPS or Warrants - many options, LEAPS and long-term warrants are available for purchase on mining companies
Short Term Expectations
Short term expectations require special skills by the investor or the advisors/analysts which they follow. The investment vehicles may also differ if one is looking for merely short term gains. Those investors with short term expectations must be acutely tuned to the short term swings in the markets and they must be mentally prepared to act quickly to enter and exit positions. Personally, we believe most investors lack the skills to perform consistently in this short term environment. No one rings a bell and tells investors when to enter or exit on a timely basis. Yes, we understand the excitement of receiving quick gains, if you are successful, but only you know if you have been successful with short term trading.
Many investors with a short term expectation in the natural resource sector as well as financial markets around the world were no doubt devastated by the collapse from September 2008 to February 2009. I fear many of these investors are now completely out of the markets, beaten, broken and with no new capital to invest in the great opportunities now available due to the great decline in share prices. Will they return? Probably, but at much higher prices.
Long Term Expectations
Those investors with long term expectations were also greatly affected by the collapsing markets but if you have/had strong belief in all of the reasons for the long term performance of gold, silver, etc., you will have maintained most of your positions. You are now well on your way to recapturing your 'paper losses' as the markets are moving up strongly in the natural resource shares.
Patience is one of the most important assets an investor must possess. True, this is not always easy as the markets are going decidedly against one's positions, but patience is essential to your success.
Is long term merely a 'buy and hold' strategy?
Our view is when we enter a position in a company's shares or long-term warrants that we will maintain the position until, either of the following events takes place.
- Our expectations of a bull market in gold, silver, etc has changed
- Our expectations of a company's specific performance has changed
- The shares are warrants have reached our financial expectations and we take profits.
For those readers unfamiliar with our services:
- PreciousMetalsWarrants.com provides an online database for all warrants trading on the natural resource companies in the United States and Canada.
- InsidersInsights.com tracks the buying and selling of corporate insiders with a focus on the junior mining and natural resource sectors. Buy and Sell Alerts are issued as deemed relevant based upon our analysis.
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