A Reader Writes

Reader, Ali, writes..

"Thanks for sharing some of what you know with those who wish to learn from you. I've just begun investing independently and plan on benefiting from the knowledge of those wise in the ways of the market.

"One of the benefits peculiar to your site is the frequency at which i come seeking clear 'do this, do that' guidance on google and the like only to leave kenning that it ain't as simple as that.

"Comments, I don't know how to understand much about DNMIF, much less how to judge whether I ought to buy it. Lack of financial details about it on msn, morningstar and others doesn't help an amateur like me. Question--Would you please help us understand better why you say about DNMIF what you do?"

To which I reply...

Great comments, excellent question; thank you! (Oh, you also wanted 'answers'...? ;-)

Hmm, re: specific buy & sell tactics -- it rarely is as easy as all that, as you noted. After all, when you buy or sell, another investor is selling or purchasing. What is it they see that you do not? (And vice-versa, of course.) The typical 'answer' of course is differing time frames between investors -- which however is not the sole answer.

I believe the true answer lies within each of us; our objectives, risk tolerance, and time frame are as unique as we each are as people. If, for example, I were to say, "Buy Google/GOOG!" with the going price today at ~$300, and the shares first decline to $270, and then trade sideways for weeks or months before making a move toward $400, or $500, then you would conclude the shallow price decline and lengthy sideways trading pattern are perhaps painful to you but not noticeable to me because this company, for me, is an investment. And that todays high price will seem low when compared to its future higher price.

I always acknowledge the short term swings, which I utilize to better my entry and exit prices, and to discern risk and opportunity. The set-up in the equities market today reminds me of Mao Tse-Tung's comment; to paraphrase, each long term decline begins with a short term correction. One never knows -- and certainly I do not -- until we are well into the throes of the more serious and enduring market move, up or down. So I trade around the short- and intermediate-term trends. Moreover, I would never recommend buying or selling any security seemingly willy-nilly. (Although I admit for some investors it might sometimes seem that I do! ;-)

For example, I have repeatedly warned re potential coming market weakness. As I scan today's markets using inter-market analysis (previously described) I note warily the painful rise in the price of oil, precious metals, other commodities, and interest rates, etc. I also note the startling lack of volume in the critical areas. For how long, do you think, can equities ignore what occurs in the other markets? Nonetheless, I will hold my Google/GOOG investment throughout because any decline in the shares, deep or shallow, are predicated on market weakness; nothing has gone amiss at the company. From such thoughts are investments made.

Each of us for our own needs must determine market and security risk. This is why thare is no easy, one-size-fits-all answer to the question, "Buy, sell, or hold?" Anyone who tells you different is pulling your leg. (There are exceptions, of course; one being "terminal shorts".)

Re Denison Mines/DNMIF -- Your question is critical, and I fear my answer will prove insufficient. The story here is platinum, ain to the one word, plastics, in the movie, THE GRADUATE.) Cameco/CCJ is far and away the leader of this group, with Denison Mines a distant second. If I want to own this group, then I purchase its leaders, which I already have named, and then I find the best chart patterns -- both Cameco and Denison look very similar. Finally I begin my due diligence. IF, however, you do not have access to company financial details, then move on. Do not accept as gospel the comments of any investing 'guru', which includes me. When in doubt, do without.

There are so many winning stocks, groups, and sectors, do not limit your selection to just one. (Well, perhaps make an exception for Google/GOOG; long term, of course! ;-) For example, among the many recommendations made previously are:
Apple/AAPL
Cheesecake Factory/CAKE
Corning/GLW
Dominos/DPZ
eBay/EBAY
Google/GOOG
Johnson&Johnson/JNJ
Qualcomm/QCOM
Station Casinos/STN
Whole Foods Markets/WFMI
(BTW, there also have been duds that stank up the joint, but I typically am not long those for any lengthy time.)

If you view the market from the bottom up, then upon discovering individual stock strength confirm that strength by its group and sector also showing leadership. With the exception of one specific singular opportunity, I typically am not a buy & hold investor, although I have been known to own some investments for upwards of months, even one or two years.

Which is why there is no one correct answer for what others characterize as black & white decisions for us all. Yes, we can make decisions black & white but applicable only to our individual needs. That is, we take responsibility for all [of] our actions through to completion. Alas, there is no one right answer for Google/GOOG. ("Sorry!") The one right answer for Denison Mines, however, could be, "Move on..."

Best wishes on your new career in investing!