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Gary Tanashian is proprietor of and Actionable, hype-free technical, macro economic and sentiment analysis is provided in the premium market report 'Notes From the Rabbit Hole' ( Complimentary analysis and commentary is available at the... More
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  • Core vs. Non Core Stocks 0 comments
    Jul 7, 2011 7:58 AM | about stocks: RBYCF, BCEKF, PAAS, SAND

    In the NFTRH speculative portfolio, I make a big deal about defining 'core' vs. non core items for a reason.  In some cases, the reason is political risk.  In others it is a case of not feeling 100% comfortable with company management.  In the precious metals mining sector, these qualifiers are amplified.

    An example of a non core items sold for profit is Minefinders (MFN) after management finally delivered some improved guidance.  I did not trust them 100% however, and sat out the serious decline that followed the rise to (and through) target, before re-buying and profit taking once again.  Both trades were highlighted to NFTRH subscribers by the way; and they were highlighted simply as trades.

    Another example was a trade in Bear Creek Mining (BCM.V) before the election and protests in Peru zonked the stock.  When it unexpectedly presented good profits I had to sell, given the questions surrounding the oncoming 'too close to call' election.  BCM subsequently got chopped nearly in half.  By the account of IKN's excellent (and local) analysis, this stock is a value now and I have added it back - risk and all - but not as a core item.

    And then there are the two items on this chart.  Upper panel is young gold royalty play Sandstorm Gold (hat tip to Jordan, from whom I first learned of SSL), which I have held calmly for over a year now, never once thinking of selling (90+% gain) because I believe in the gold sector, the real gains lay ahead.  Is that a pump?  Come on, I have gold bugs mad at me half the time for telling it like I see it where downside possibilities are concerned.  It is a statement that results from the ongoing work I do on macro and sector fundamentals.

    The lower panel is the much hyped gold exploration company Rubicon (RBY).  I have traded this one both successfully and unsuccessfully.  Actually, it's all good because I have never let this non core item hurt me for catastrophic losses.  One of the things I learned long ago from the must read book Reminiscences of a Stock Operator is that if you are going to sell, then SELL and do not look back.  Cut losses.  RBY management have screwed the pooch now too many times to ever be considered core as currently structured. RBY is at support and may well pump it up again, but it is what it is in my book.

    Look at the chart; top panel is an investment.  Bottom panel is a dog.  Post inspired after a review my portfolio this morning had my eyes pop out a bit at SSL's 90% paper gain.  Really, I have not even looked at it in many weeks, and did not realize it was that high.  Having core items to hold and others to trade around really makes the whole process of portfolio management - for me at least - much less stressful.

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