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HarryCarysGhost (99.77)

Why would you short SLW?

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7

October 16, 2010 – Comments (7) | RELATED TICKERS: SLW

The following will be a tale from real life investing.

 In the post -

 Day Trading, is it really worth it.

I introduced you to my sister-in-law Tipper.

Whelp, I talked with tipper again today. Told her about my latest investments junior silver mines, and silver in general.

(keep in mind I placed my bets months earlier).

She said that shes caught in a short squeeze on SLW,started at $23.

I did'nt understand this, but said, yeah silver has been having a nice run-up and would'nt be suprised if we saw a pullback. (I don't know,was trying to be polite)

Now heres the part that blows my mind-

 Me- You know theres a lot of traders jumping on the silver bandwagon.

Tipper- No S#!+

Me- Also talk about a potential dividend has investors running to this stock.

Tipper- there might be a dividend?

So this tells me that she had complete faith in the charts, without reading any news or the fundementals of the company.

After that she showed me some neat chart tricks, which I will probably use to determine my limit prices, but I remain steadfast on buying on Fundementals.

Cheers!

7 Comments – Post Your Own

#1) On October 16, 2010 at 11:33 AM, Valyooo (99.81) wrote:

I sold all of my slw holdings at around 26.50 hoping for a pullback (I have such a small amount of savings that selling half of it would make no sense because of commissions, etc). I really hope it pulls back to 24ish, because then I am in for the longhaul

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#2) On October 16, 2010 at 12:58 PM, HarryCarysGhost (99.77) wrote:

@Vallrooo

Ok, I could see that, not my style but at least I get what your trying to do.

Lets assume you owned 100 shrs bought at $20

Lets also assume commissions at $10

$2010

Selling at $26.50  would give you a profit of $630 not bad.

With my limited knowledge of charts, even I can see that the indicators are pointing to a pullback. But what if it does'nt, Mr Market does'nt have to do what it's told by the charts.

Even Tipper admitted that SLW could be a $50-$60 stock in a year.

Unfortunatly for me I don't have the resouces to buy SLW right now, Or for that matter when I really wanted it at $13. I was buying the physical silver at the time.

I guess the point of this blog is even if you see a pullback coming why would you consider shorting this company.

Best of luck.

ps. 

(the thought of dumping GE And buying SLW has crossed my head, what do you think?)

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#3) On October 16, 2010 at 7:56 PM, Valyooo (99.81) wrote:

Well the reason I am trading around slw, is because I want to try trading while I'm a college kid and have time to mess around. Probably won't work and ill switch to investing, but why not? I'm not too bad at it

If it doesn't pull back, well, guess ill have to find another opportunity, but once they pay out a dividend ill probably get out regardless

I don't really know much about GE other than the stock seems to be goingnowhere, it has a lot less room to grow, and their earnings that just came out really stink. I'd definitely switch to slw on a pullback, but I'm no expert. I have a weird style of trading. I've really only been into for 4 months. I have little knowledge of fundies and TA, I just pick up on patterns pretty easily and gauge sentiment. I'm reading up on TA now, probably gonna work on it for like 6 months, then do a lot of fundies research (I have connections at brokerages that want to hire me after college, I figure they'll probably train me so I'm doing the TA first)

But I read a lot of news and stay up to date with the market. Experience > learning

I would neverrrrrrrrr short slw. Ever.

Btw is her name really tipper? Awesome name.

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#4) On October 17, 2010 at 4:43 PM, HarryCarysGhost (99.77) wrote:

No, as always the names have been changed to protect the innocent.

Funny thing is I almost told her that I post on CAPS, caught myself.

My posts have not been flattering on her investment style, but I don't feel bad since she's somewhat of a bitcharooni.

Hoisting a Bud for our continued success.

Cheers.

 

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#5) On October 18, 2010 at 6:23 PM, Bays (33.78) wrote:

Phillip Fischer was responsible for me not selling this stock during it's run from 3.90 cad to 28+ today.  His book is a must read.

Anyway, he makes some great points about stocks that "get ahead of themselves".  When you believe in the business model and the mgmt, why would you attempt to time the market and sell because you think there may be a temporary drop in the SP? 

How many times did WMT, or any big company for that matter, get ahead of itself?  

I am lousy at timing corrections and have been burned before trying to do it.  Watching that stock rise after I sold it, hoping to buy back at lower levels, was devastating.  Plus, I only would have made minor profits if I would have timed it correctly, compared to the huge gain of holding through all the ups and downs. 

The fact of the matter, I have a much better percentage of being right over a long time period than I do in the short term.  The market is completely irrational in the short term, who would want to play that game???!

Phillip Fischer had a 3 year rule, if the stock price didn't catch up to the fundamentals within three years, he would sell it.   Most people these days wait 3 weeks! lol

 

On another note, SLW and TC continue to be the most shorted stocks on the TSX.  Two of my largest holdings.  Not sure if this is for hedging reasons, or people are just completely crazy.

Bays,

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#6) On October 18, 2010 at 8:03 PM, HarryCarysGhost (99.77) wrote:

Hey Bays,

I'm with you, I tend to have a long term veiw on all my investments, The only time I deviate is if I think a particular commodity or sector has been beatan down. Oil at $35 comes to mind but even then I held my oil stocks until it was oil $75. So about six months is a short term trade to me.

Also I've never shorted a stock in my life. If I think that poorly about a stock I don't spend the time researching it after about a minute or two.

I'll have to look into Phillup Fischer, seems right up my alley.

Thanx.

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#7) On October 18, 2010 at 10:45 PM, Bays (33.78) wrote:

Harry,

Me too, I've never shorted.  I know how long the market can stay irrational for.  

Phillip Fisher's "Common Stocks and Uncommon Profits" is a great read.  You can see why Warren Buffet loved the book so much.  

His strategy in a nut shell was this:
Top notch mgmt
Top notch R&D
Top notch sales and marketing
Lowest cost producer in their industry

He believed in holding forever as long as the above remained in tact.  He took DD to a whole other level.  This guy would investigate everything there was about the company; how they treated their employees, what the competition/customers thought of the product, etc... The list goes on. 

Buffet basically combined this approach with Benjamin Graham's fundamental approach. 

But yeah, there really is some great advice in there that could have helped me out in my early investment career.  Such as, limit orders a few cents below the market price.  If the investment is for the long term, the couple of cents will not matter! I had a stock come within a few cents of my ask, just to watch it triple from there.  

 

 

 

 

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