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XMFSinchiruna (27.48)

Two Years in the Life of a CAPS Blogger

Recs

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November 17, 2009 – Comments (13)

With my two year anniversary as a CAPS blogger fast approaching, I thought this might provide a fitting moment to look back through my posts over the period to see revisit some of the highlight discussions, determine what we've learned along the way, and to begin to codify for the record where I have erred and where I have provided helpful guidance. I hope you enjoy the post, and I look forward to another two years of Foolish discussion here in the best investment blogosphere on the web. Let's begin ... at the beginning.

I became a Fool in June 2005. I wish for the life of me I could remember the article that brought me into the fold, as I would like to thank the Foolish writer that so unknowingly changed the course of my life. I quickly signed up for the Inside Value newsletter, started visiting the site more often, and by late 2006 I started building my CAPS portfolio with many of the still-active picks (SLW, KGC, AUY, etc.) that already by that time comprised the majority of my equity holdings. The core investment thesis that drove my investment decisions then remains exactly that which drives my decisions today, and indeed there is almost nothing about it that I would change from the way it appears in my CAPS profile from late 2006:

"The best offence is a good defense, and people, this is a time for defense. Commodities, alternative energy, and international!! Gold to $2,000! Silver to $20 on its way to $50!"

Long-time Fools will recognize those price targets, as they have changed very little over the years (I have raised my expectations for silver). They are reflected in one of my earliest blog posts from December 2007 (gold was around $800 per ounce, as everyone and the mother was out heralding the end of the bull market in gold):

"Gold will punch beyond $2,000 before we can even be thinking about a reversal.  Silver has a great story too, as it has been manipulated downward throughout this bull market and so has perhaps an even more meteoric rise ahead as it ultimately catches up with traditional gold/silver price ratios.  Silver will be at $20 before the Spring of '08, and then it's a quick trip to $50!"

I offered a more nuanced description of my outlook with my stock pitch for Freeport McMoRan written a month later:

"Gold will pass $1,000 before we know it, and after several unconvincing consolidations, it will resume its rise to $1,650 and beyond! Copper has come off its highs because analysts predict softening US industrial demand will lead the price lower. I do not subscribe to this. As the dollar plummets, the value of copper as denominated in dollars will rise just as gold will. Demand from the BRIC countries will be sufficient to keep the global copper shortage intact."

Despite having nailed the call with the first portion of my pitch, the rest of it brings me to my most eggregious error of all the calls I have ever offered here at TMF. I saw the commodities as an unstoppable freight train that would shoot straight into the stratosphere, seeming to ignore the lessons I should have learned from gold's monstrous 2006 correction that led me to sell some pm equity holdings like SSRI into weakness. Anyway, I completely failed to see the March 2008 correction coming, and even after it hit I continued to underestimate both its severity and longevity. HOWEVER, while it seemed that just about every pundit and blogger alike was abruptly declaring the end of an era with respect with the commodities bull market, I doggedly stuck to my contention that we were witnessing merely a corrective phase -- albeit it a severe and protracted one -- within a much broader multi-year secular bull market that had much further to run. In this important point, I was right on the money, and I'd rather miss on the short-term gyrations of a panic-driven marketplace any day before I'd wish to be on the wrong side of the longer-term fundamental dynamics at work. Incidentally, in failing to predict either the extent of the 2008 dollar rally or the degree of paralysis throughout the global economy, I remained in very good company. :) My bullish call for Aluminum Corporation of China from June 2008 comes to mind, and I continue to apologize to each and every Fool who have based any investment decision in part on that ill-timed analysis. I hope I made up for it with Silver Wheaton and Yamana :)

I have no problem whatsoever bringing my noteworthy mistakes to the fore. I had several horrendous calls that resulted from that same failure to appreciate the extent to which the dollar rally could be sustained in contravention of underlying fundamentals (much the way I failed this summer to predict the persistence with which the broader equity markets could be sustained in contravention of the complete absence of fundamental drivers or economic recovery). 

You see the pattern, though ... I pay attention to the fundamentals ... if the markets want to stretch any movements beyond the realm of fundamental underpinnings, as long as that fundamental understanding is well honed, I am content to recognize the missed short-term call and await the return removal of a market dislocation. Looking back, it's crystal clear that the dollar rally was the most massive market dislocation event I have ever witnessed. With the Dow above 10,000, this rally is beginning to give the 2008 dollar rally a run for its money in terms of a massive market dislocation. I missed the timing with my summertime calls for a market reversal this year, but reverse it shall. My fundamental focus empowered me to maintain all of my precious metal holdings in tact -- without selling a thing! -- throughout a correction that sent my mining equities diving by as much as 80 to 90%. With gold's recent breakout, I have now regained those unrealized losses, and I believe that this result stands as a testament to the beauty of fundamentals-based investing. I know it's not for everyone, and it was scary at times, but over the long haul it sure is working for me. I have learned to reign in my expectations for timing, and indeed to deaccentuate the importance of timing within the framework of an investment strategy, as my overly eager expectations from January 2008 in anticipating PAAS at par by the end of 2009 can now be seen as grossly premature. I remain entirely confident that PAAS shares will hit par, but I no longer am willing to ascribe a definite timeframe.

If you had told me back in 2006 that gold would still be beneath $1,200 in late 2009, I'd have thought it completely impossible. While that only leaves my more bullish about the potential for an abrupt repricing event still coiled into gold like a spring, the lesson is that markets are entirely too unpredictable to permit reliable forecasting that is linked to future moments in time. I no longer care when gold hits $2,000 ... I just know that it will.

I am running out of time before I even get into linking my favorite blog posts. :) I guess this will have to become a multi-part installment. Thanks to all of you for making my first two years on the CAPS blogs such an rewarding experience, through the enjoyable as well as the frustrating moments of it all. As I've said many times before, there is no community of investors out there that I'd rather share a depression with than you Motley Fools. ;)

Fool on!

13 Comments – Post Your Own

#1) On November 17, 2009 at 10:02 PM, XMFSinchiruna (27.48) wrote:

On an unrelated note, I think this is one seriously bullish development for a very high quality infrastructure specialist:

http://www.fool.com/investing/small-cap/2009/11/17/the-bold-new-structure-in-infrastructure.aspx

BIP will rake it in over the long haul with these well-positioned assets.

 

And finally, Goldcorp is having quite a week as well:

http://www.fool.com/investing/general/2009/11/17/a-banner-day-for-goldcorp.aspx

 

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#2) On November 17, 2009 at 10:25 PM, topsecret09 (34.26) wrote:

 Hey Sinch...   Given that we now sport a deficit that Is approximately 95 % of GDP,and that the FED has let the BIG BANKS feed from the trough with regards to large loans (basically 0%) enabling them to artificially Inflate the stock market,and given that the FED will eventually HAVE TO BEGIN TIGHTENING CREDIT,where do you see Gold& Silver In the coming couple of years ?    TS

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#3) On November 17, 2009 at 10:45 PM, GNUBEE (29.01) wrote:

Sinchy, kudos for not flip flopping during your tenure. It's refreshing to see someone stick to their convictions. When your losses took a toll, what was your CAPS low point?

What a roller coaster ride.....

GNUBEE

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#4) On November 17, 2009 at 11:39 PM, TMFJake (77.05) wrote:

Happy anniversary!

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#5) On November 18, 2009 at 12:09 AM, RainierMan (80.23) wrote:

I think you've added a lot of value here. I've always appreciated your macro views. And, yes, you've stuck to your guns even when a lot of people thought you got it all wrong. Not everyone can do that.

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#6) On November 18, 2009 at 12:41 AM, chk999 (99.97) wrote:

Congratulations Sinchy!

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#7) On November 18, 2009 at 5:22 AM, kaskoosek (61.54) wrote:

Sinch

I've always respected your thoughts the most out of all Caps bloggers. 

 

Though I disagreed with you on the call that the market would crash in late Summer. Inflation is also positive for stocks in nominal terms. 

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#8) On November 18, 2009 at 7:26 AM, ATH001 (< 20) wrote:

Congratulations on the 2 years and the SLW and Yamana calls definitely make up for a whole lot. Not that there was a whole lot to make up for. Thank you for bringing our attention to them, when you did.

Since you have a TMF, does this mean you contribute to any of the TMF subscriptions? If yes, are you able to inform which one?

Thank you again,

Luis

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#9) On November 18, 2009 at 9:02 AM, binve (< 20) wrote:

Happy anniversary bro !!!

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#10) On November 18, 2009 at 9:49 AM, XMFSinchiruna (27.48) wrote:

GNUBEE

My CAPS portfolio seriously tanked from the top 100 into the bottom 100 players! :) Virtually overnight. It was surreal. Had it not been for the 2006 correction, I would not have had the conviction necessary to leave my positions untouched through that incredible dip. The charts tell an amazing story when you consider the mindsets that went along with them, do they not?

ATH001

The TMF was added when I began writing published articles for the Fool. I do not contribute to any of the newsletters, writing exclusively for the public side of the operation. You can find links to all my articles at my Twitter feed here:

http://twitter.com/statuses/user_timeline/55634438.rss

 

Thanks again to you all.

 

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#11) On November 18, 2009 at 10:30 AM, Bays (30.25) wrote:

Congrats on 2 years.

I hope to congratulate you on your 5th, 10th, etc..

Youre a vital resource to this community.  Appreciate it.

Cheers.

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#12) On November 18, 2009 at 12:11 PM, jesusfreakinco (28.86) wrote:

Chris,

You provide some of the greatest insight to my holdings of ANY bloggers on the net!  I really, really appreciate your insight and what I have been able to do in my portfolio through it.

JFC

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#13) On November 19, 2009 at 2:08 AM, alberta911 (75.23) wrote:

Christopher Barke,

Congratulations to your two year aniversary of contributitions. Glad to see Canadian Silver Wheaton and Yamana Gold have been profitable to you...perhaps one day you will jump up the leverage pole and own their warrants rather than the common stock....

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