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  • Will Silver Stocks Outperform Bullion at $130 per Ounce? [View article]
    You have to think of your opportunity cost to pick any of these companies. The profits that you would expect over an alternative investment whether it be a T-bond, CD or blue chip stock should then be discounted by the probability of a loss on your selection. If these stocks have already had a run up in price, this could prove to be a very risky decision to buy these miners at this time.

    The way I play mining in general is CAT. The higher the price of silver goes - the more mining equipment gets sold.

    Disclosure - the man in the hat is long CAT and it comprises between 1-2% of my total capital invested.

    The best way to make money in the market is not to lose it.

    Feb 22, 2011. 11:10 AM | 1 Like Like |Link to Comment
  • Will Silver Stocks Outperform Bullion at $130 per Ounce? [View article]
    That is exactly my point. Its the hoarding of the metal that is causing the price rise. Then the greed of speculator to push it up higher. These speculators then become gurus and self described experts. This builds their own confidence and then they venture out on margin to the extent that any small deviation from trend gets them into trouble.

    All it takes is some completely unforeseen event to completely collapse the market. That what happened to the Hunts back in the 1970s.

    As with all markets, unforeseen events to influence the price do occur. Some are not that frequent and some with very low probability but when it does happen, the expert methodology will fail. In his failure, the expert will be forced to sell contributing to a burst bubble. Financially for him worse than a complete loss.

    I've seen this happen to a friend. Fortunately only losing all his money but he sank into alcoholism in his despair and now is supported by his wife's income.
    Feb 22, 2011. 11:00 AM | Likes Like |Link to Comment
  • Will Silver Stocks Outperform Bullion at $130 per Ounce? [View article]
    The advice I gave in my previous comment should be considered by anyone who ventures out on speculation of further price rise. I truly want to help you and receive no benefit of my own in not being involved at all in this market for silver other than ownership of some collectible coins which I only keep and do not buy nor sell (haven't bought any in over 20 years.)

    I appreciate knowing the negative rating of the comment which I take to mean that the rater may have an opinion of confidence that silver will continue to rise in price.

    My commentary is to make my fellow readers here on SA to consider the risks involved. I hope this would make for better overall decisions in regard to investments and possibly help to avoid financial ruin.
    Feb 22, 2011. 10:50 AM | Likes Like |Link to Comment
  • Caterpillar Benefiting From Declining Dollar [View article]
    CAT - Since you did ask the man in the hat - I am a shareholder, LOL.

    I never gave thought that there would be a CAT benefit from a weak dollar. International competition comes out of Asia for this type of equipment. But, the biggest unknown will be the Bucyrus synergy. Their outlook is very strong and mining equipment sales to South Africa and India are not fully discounted into the combined company outlook, IMHO. CAT is still cheap and has plenty of room on the upside.
    Feb 22, 2011. 10:39 AM | Likes Like |Link to Comment
  • Will Silver Stocks Outperform Bullion at $130 per Ounce? [View article]
    SLW , HL Silver futures - I support your analysis. You could do very well during this bubble phase but you have to have the view of elasticity of demand. For many applications there are no substitutes for silver. It would continue to be purchased for certain electronic needs regardless of the price but others have substitutes that will come into play. One glaring example I observed at the Jewelry and Gem Show (probably the biggest in the Eastern US held in Chantilly, VA yesterday) was the substitution of pewter for silver in jewelry. They had some clasps and chains in alloys that do not tarnish.

    Anyone speculating on further price rise needs to consider the actual functional demand for the metal as you are doing versus the speculative hording.

    The speculative hording can turn into the speculative dumping. The short run instead of a few months or weeks on the up side could turn into a devastating decline in just a few days if not a few hours with only the limit move decline circuit breakers on the futures market. And then, with limit down prices there would be no bidders to sell to.

    If margin comes into play, the holders of long contracts will be completely wiped out and margin calls will still have to be repaid. Margin calls will cause further declines and forced selling to cover. This would go beyond the speculator's total ability to pay causing bankruptcy and in some cases suicide.

    Please - if you do "invest" in silver, be prepared to have a total loss and the means to deal with that eventuality regardless of the extremely low probability that it would happen. But, it has happened before.

    HL Hunt is the prime example of what could happen.
    Feb 21, 2011. 09:42 AM | 1 Like Like |Link to Comment
  • 5 S&P 100 Companies You Don't Want in Your Portfolio [View article]
    Probably the best thing about investing in high profile companies is the ability to track them. Plenty of news if you can take the headline reactions on the down side where in many cases could provide a buying opportunity.

    After last week's sting from a financial company that got hit from their trading in derivatives, I dumped it completely. Who knew they were speculatively trading derivatives? I'm too embarrassed to mention what it was.

    Bigger domestic companies are more transparent. You got a great list of picks.
    Feb 21, 2011. 09:18 AM | 1 Like Like |Link to Comment
  • Will Silver Stocks Outperform Bullion at $130 per Ounce? [View article]
    The run up is probably short term but the question is when will it crash? It could take a long time and those short without the actual commodity to deliver will have to buy and bid it up further in a dear market to meet contract requirements.

    This is not that rare a commodity. There are silver mines that have closed down because the ores are not rich enough at the lower price but that is changing. Then there are new discoveries of silver deposits that previously have been too remote to economically exploit. Now they are.

    When the miners see the light to start a plan to expand production, they would do well to clear out their total inventory and hedge their future production at the high prices. Then the price would decline. Its just a question of when they will push the button to sell.
    Feb 20, 2011. 03:19 PM | Likes Like |Link to Comment
  • 5 Large Caps Being Chased by Institutional and Mutual Fund Investors [View article]
    How much is a pound of pennies worth right now?
    Feb 18, 2011. 04:23 PM | Likes Like |Link to Comment
  • 5 Large Caps Being Chased by Institutional and Mutual Fund Investors [View article]
    CAT - Chased? In the case for CAT I believe its strategic investing. They are benefiting from an economic rebound, increased spending to upgrade and maintain infrastructure, the surge in metals prices increasing mining exploration and ore recovery along with the combination synergy that will come with Bucyrus.

    This is long term strategic investing - not quick buck trend chasing.
    Feb 18, 2011. 11:34 AM | Likes Like |Link to Comment
  • What Are Big Investors Doing With Bank of America? [View article]
    At 4 it looked like a complete bust but investors like yourself gave me some confidence and I bought in around 9 for some of the their other preferred issues. Now I'm worried they'll go over par and start to be called. Look over the call dates and map out a strategy. Mine is to buy the warrants and wait till '19 to exercise with a zero T-Bond to come due at that time. Getting a fair return on the Treasury issue and by that time BAC should be pushing out a decent dividend. If the rate starts to eclipse the Treasury gain that will be the time to sell the warrant and buy the stock.
    Feb 17, 2011. 01:47 PM | Likes Like |Link to Comment
  • Mega-Cheap Mega-Caps Could Fuel Mega-Gains in 2011 [View article]
    JNJ - My big draw to JNJ was the blood test announcement for tracking tumors. This has great potential and may eclipse the earnings of any new pill product coming out in the sector. I believe this blood test could become a preliminary diagnostic technique and would be required by all for general medical screening.
    Feb 17, 2011. 01:36 PM | 3 Likes Like |Link to Comment
  • Warren Buffett's Berkshire Hathaway Holdings [View article]
    Excellent rundown but what ever happened to GEICO? Did he fire the Gunny?
    Feb 17, 2011. 01:29 PM | Likes Like |Link to Comment
  • January Retail Figures Not Surprising; Buffett Bails on Bank of America [View article]
    Buffet was wise to lighten up but that's old news. His Marine Gunny from the GEICO ad gave him some recent advice. "You cry baby, buck up and get some self confidence. Now's the time to buy."
    Feb 17, 2011. 12:23 PM | 2 Likes Like |Link to Comment
  • Why Buffett's Right About Bank of America and What to Do About It [View article]
    Buffett is a cry baby. He should take the advice from his GEICO ad - "What we need is build you some self confidence - you cry baby!"
    Here, have a tissue.

    In the end - he's going to find that a buy and hold strategy from the time he sold will win out for the long term. Then the crying will start again when they fire up the dividend by year end, LOL.
    Feb 17, 2011. 12:17 PM | 2 Likes Like |Link to Comment
  • What Are Big Investors Doing With Bank of America? [View article]
    BAC - He's the guy that runs all those ridiculous Geico ads and I haven't seen the best one run in several weeks now - The Marine Gunny analyst. Buck up Warren you cry baby. You now what we need, we got find you some self confidence!
    Feb 16, 2011. 11:33 AM | 2 Likes Like |Link to Comment