Is Close-ology The New Strategy?
We have seen this happen in the Yukon with the White Gold District and then in Tanzania with Canaco Resources. The list goes on and on from the "Ring of Fire" to the Hemlo District. Now the markets have once again embraced graphite and Zenyatta seems to be the one to watch. If you play the markets though you may choose to watch for the close-ology to kick in on another venture junior.
A lot of juniors with a lack luster gold or silver program have miraculously locked down property near Zenyatta in hopes of reeling in some of the investment dollars flooding in these day to graphite.
The problem with close-ology is how close is close enough to be "in the zone". That is up for debate but as long as you indicate you are "next to" Zenyatta you may get not only media attention but a flood of day traders and get rich quick stock market players. All those Etrade commercials on TV have led a new wave of investors to the markets. About 5 years ago it started out with college kids and grandmas and now its anyone with wifi.
Trading the next big hype story seems a bit like a no-brainer when you first look at it. For some it may be the new economy for making a living in the markets. Trading volatility alone has proven to be more profitable these days than going long. When you back up your savings to a blue chip stock there is some comfort that you are safe. The problem is hard times can hit good companies and political instability has been the death of a lot of companies the past 3 years. Hiding your money in a blue chip stock at $50 a share could still result in a 50% haircut these days.
I am changing gears this year and am taking part of my portfolio to cash to play these close-ology and hype plays. The momentum cannot be ignored and the volatility can be money in the bank. As long as you put short term goals in place and don't fall in love then things should work out. When news comes out remember that it usually has a 72 hour shelf life and then it may start to retrace to where you bought or even lower. The "sell on news" factor is real. Also consider that when news comes out on a stock some investors think this is as good as it gets for a while and move on. The hypsters may try to convince you that a steady news flow is about to start but that doesn't usually happen.
Don't sleep in, get up early and watch for it. The window of opportunity may be small and should present itself in the first 30-60 minutes of trading. This may not be a strategy for everyone but I am going to see how this goes over the summer. I am still long on some old favorites but while I wait I think I will try to make some extra money.
CONTENT POSTED ON THIS BLOG DOES NOT CONSTITUTE A BUY OR SELL RECOMMENDATION. MANY OF THE COMPANIES PROFILED HERE I AM NOT INVESTED IN AND DO NOT INTEND TO INVEST IN. THESE ARE MERELY MY THOUGHTS ON MARKET CONDITIONS AND STOCK VALUATIONS. INVESTING IN THE STOCK MARKET CAN BE VERY RISKY AND YOU SHOULD ALWAYS CONSULT AN INVESTMENT PROFESSIONAL BEFORE MAKING ANY DECISIONS. ULTIMATELY YOU ARE RESPONSIBLE FOR CONDUCTING YOUR OWN DUE DILIGENCE AND PROTECTING YOUR MONEY.