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Dudley Baker

Dudley Baker

Dudley Pierce Baker is the founder and editor of Common Stock Warrants and its predecessor, Precious Metals Warrants and a 1967 graduate of St. Mary’s…

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Is It Time to Dress Up Your Portfolio?

As investors wait out this continuing consolidation in gold and in the natural resource shares we suggest taking the time to dress up your portfolio.

All of us like to get a 'new dress' from time to time. What we are talking about is putting a new face on your portfolio and making some tough decisions in preparation for the next move up.

Women will no doubt warm to this idea faster than men as women are know to be shoppers and looking for that new dress, shoes or accessories to spice up their wardrobes.

Men on the other hand are probably more likely to wear the same old suits and ties, for months and years with very few additions to their wardrobe.

We understand that change is difficult for many investors, however, it is essential, to revisit your portfolio from time to time and re-evaluate your holdings.

Ask these questions:

  • Why do you own each position in your portfolio?
  • Are the shares performing as you want?
  • Would you buy the shares today, if you did not already own them?

This sounds rather elementary but it will make you think and evaluate the reasons for your continuing interest in holding each position.

All of us have some dead wood in our portfolio which should probably be sold but making this decision is never easy. We should try and distance ourselves from our portfolio, be objective and ask tough questions of ourselves. Why? There must be some reason I bought this dog? What is it?

We find this experience invigorating as we always find some shares which we decide to sell and thus we free up some new monies which we can now use to establish new positions.

This week we were fortunate to have two stocks we follow announce mergers. Both companies jumped immediately on the news and we alerted subscribers to take profits. This is the best situation possible as we made great gains, in one case, in excess of 300% and now have cash available for that 'new dress', i.e. a new position to be added to our portfolio.

We encourage you to perform this review on a regular basis, perhaps every month or every 3 months. You will get better at making decisions and slim down your portfolio to those positions in which you are more secure and confident in the future performance of the share price.

As you have new capital to invest we suggest considering alternative investment strategies to spice up your portfolio. Like that 'new dress' you will need shoes, jewelry, etc. to make your new outfit complete. Why not do this to your portfolio?

Depending upon your investment time horizon and tolerance for risk, consider adding some call options, LEAPS or long term warrants which are available on natural resource companies which you really like. This will give you some leverage and could greatly increase your gains on the next up leg in the markets.

For those readers unfamiliar with our services:

  • PreciousMetalsWarrants.com provides an online database for all warrants trading on the natural resource companies in the United States and Canada.
  • InsidersInsights.com tracks the buying and selling of corporate insiders with a focus on the junior mining and natural resource sectors. Buy and Sell Alerts are issued as deemed relevant based upon our analysis.

We encourage all readers to sign up for our free weekly email.

 

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