first majestic silver

Gold Stocks vs Funds and ETFs

Technical Analyst & Editor
April 22, 2006

My preference in funds and ETFs over individual stocks are well known to all subscribers. Today was a very good example of why. It was a rehearsal and many more days like today will occur as long as this gold bull market continues. Hard and fast, over the cliff plunging action is typical of a bull market, and should not be a surprise for anyone who has been in this bull market for any length of time.

During the panic selling today, I received many distressed emails from members asking for advice, and the reason was primarily that so many gold stocks were breaking down, they wanted my advice to which ones to hold and which ones to dump. Folks, scrambling over ten to fifteen charts during a panic sell off is not fun, and often lead to poor decisions and execution. Those gold stocks sporting a long tail today were evidence of panic selling, traders unloading at market price and got terrible fills. The more illiquid the stock, the harder they fall. It is very difficult to control your emotion when most of your stocks are free falling, and that leads to hasty decisions which were never planned. One simple way to avoid that is: do not watch intraday quotes. Turn off the TV, shut down your computer, and go get some fresh air. Deal with them after market close when there is no buying or selling, then plan your action and execute next day.

Another solution is simply owning one fund or ETF in each sector, or even a couple. Low maintenance, easy execution, and diversification.

I do like stocks, especially during an IP (impulsive phase). I did recommend a basket of stocks during the IP in December, and did very well. Why I didn't recommend another basket at the current IP or bought back the same basket as some have asked? Answer is obvious, isn't it? The IP in Dec occurred after both gold and silver have corrected to the 50ema. Current IP occurred during the parabolic rise of the metals.

Summary

Every trader and investor must go thru their own learning curve, as experience takes time. Seasoned market participants accumulate stocks after a major correction when these stocks are at or near their 200 EMAs. Novice traders and investors chase these stocks when they are hot. Some folks join our service just to get another perspective of the markets as they have their own plans. Some folks join so that they simply buy and sell when we do, not having to spend all that time to track the markets. Some folks join so that they can learn more about technical analysis and our trading models. But there is a common goal, and that is to make sure we have more in our accounts by the end of the year than the beginning. Therefore, regardless of what your needs are, bottom-line is profits. If you are not sure what, when, and how to trade and invest, why not simply follow exactly what we do, and if past history is a guide, 2006 should be another profitable year.

 

Jack Chan at www.traderscorporation.com

22 April 2006

Jack Chan is the editor of Simply Profits, established in 2006. Chan bought his first mining stock, Hoko Exploration, in 1979, and has been active in the markets for the past 37 years. Technical analysis has helped him filter out the noise and focus on the when, and leave the why to the fundamental analysts. His proprietary trading models have enabled him to identify the NASDAQ top in 2000, the new gold bull market in 2001, the stock market top in 2007, and the US dollar bottom in 2011.


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