tactical trader

I am about to invest in China (better late than never!) and found it fascinating to read some of the current material on the likely growth of this market in 2007, none more so than an article I came across in a magazine called ‘Prospect’. This is a gripping exchange between the very well known Will Hutton and Meghnad Desai of the LSE. Whether you are already in China, want to be in China or are simply interested in the China story I urge you to spend some time reading it by following the link.

Link

Are the current market jitters justified or is it more doom and gloom from the bears who have been consistently proved wrong over the last year? Personally I am a bit more nervous than I was at the end of the year, the trouble is I cannot really put my finger on the reason. I had expected the rate rise today (thanks to all those idiots borrowing far beyond their means over Christmas) but even taking this into account I had expected more stability by now.

After the major correction last May I thought it would be at least October before we saw a return and in particular a buying opportunity, true enough there were some of these but not as many as I had hoped.

India is a case in point, after the huge collapse last year it was recovering nicely and in an orderly fashion then all of a sudden it dropped for no apparent reason, so much for technical analysis!

As usual, everyone was very knowledgeable after the event and they all saw it coming. What a pity none of these experts were able to point out the likely fall when I had my finger on the buy trigger. The amount of the fall is not my concern because I have bought India for the longer term, what bugs me is that the research I carried out and the examination of the fundamentals all supported a buy and yet here I am almost immediately out of pocket. This is not the first time this has happened over the last year and it really has to call into question the value of trying to time entry and exit points where longer term trading is concerned.

This raises an even more interesting point, should I even be looking? I bought India as a longer term hold and there is no doubt that barring a major world event or global correction, the growth of the market in India is set to continue. I should just leave it alone and keep a monthly check on progress against my own objectives rather than listening to so called experts who always seem to let me down when I need them most .

The trouble is that in this information age there is so much attacking us from all sides that you cannot help but listen to it and make judgements accordingly and as much as we are told to make our own decisions we are only human. So my challenge for the next few weeks is not to listen, only to watch the price action, measure against my own growth objectives and interpret accordingly. We shall see how well I can stick to it and how I feel about my Indian holding then.

While having a much-needed clear out of old emails today I came across one advertising a newsletter called The Natural Contrarian. Normally I would dismiss this kind of email as spam and it would be deleted within seconds, but for some forgotten reason I decided to keep this one when it arrived almost a year ago so that I could see just how well or badly the ‘hot tip’ it contained would perform. Here’s how author of the newsletter, Scott S. Fraser, introduces himself:

I am clearly among the very best of America’s oil and gas stock gurus. As you may recall, six of my previous oil and gas stock-picks rose 280%, 130%, 900%, 660%, 230%, and 450%.

• Just a few short months ago, I announced a Top Priority Buy on Eden Energy at the mid-$2 range – its shares went on a tear to the $10 level for a rapid fire increase of 280%.

• Earlier this year, I recommended Fellows Energy – its value rose 130% in weeks.

• I selected Ultra Petroleum below $1 – and within 12 months it shot up 900%…today Ultra Petroleum is a $7 BILLION market-cap producer with a share-price above $45.

• I recommended Pennaco Energy at $2.50 – and early shareholders witnessed a 660% increase as Marathon bought the entire company at $19 per share.

• I selected Atlas Pipelines – RIGHT BEFORE it skyrocketed 230%.

• I announced a “BUY” on American Oil & Gas – and in 26 months it jumped 450%

Now if you’ve been in the markets for a while you’ll no doubt already be groaning and rolling your eyes (or perhaps even crying), but for the less cynical this newsletter sounds amazing! In the email the stock being tipped to “double in value” was Ignis Petroleum (IGPG). According to the newsletter:

In the immediate-term, I expect the IGPG share price to DOUBLE within the next 12 weeks as the market begins taking inventory of Ignis’s incredible oil and gas potential in Texas, Louisiana, and Alabama . Then, sit back and watch the fireworks as this intrepid oil and gas explorer begins attracting expansive market attention.

And if doubling in value was not enough:

IGPG Could Skyrocket by More than 1000% in 24 Months

How has IGPG performed over the last year? The outcome is so predictable that perhaps the idea of The Natural Contrarian is that you should do the opposite of what is suggested in the newsletter! Closing at $1.49 on February 9th 2006 (when I received the email), IGPG opened trading today at $0.12 – an impressive fall of 91.95% and at no time after the tip was issued did IGPG go higher.

I did think that maybe I was being unfair to the newsletter, but a quick search turned up this article on Market Watch from 2003 where Scott S. Fraser’s long term trading record from the beginning of 1997 through to the end of November 2002 showed a 34% annualized loss.

So the next time you receive an email promoting the next hot stock: trust your instincts (or your spam filter) and just delete it