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Author: AirForceFool Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5166  
Subject: The light at the end of the tunnel... Date: 8/24/2012 4:36 PM
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...is a train... sigh... exited my position today at a 96% loss. To say that I'm licking my wounds is an understatement... got back a couple grand... lost about half a years salary... not a staggering loss, but I still feel violated, a little dirty, and wondering if I should stop investing...

Soooooo, the only Foolish thing to do is pick myself up by the bootstraps, be honest with myself about what I did right or wrong, and learn.... so bear with me...

Lesson 1: Be wary of companies with lots of debt... this might seem like a no-brainer, but it was easy for me to get a little blinded by each rabbit ATPG pulled out of their hat... see lesson 2.

Lesson 2: Be wary of companies that have magicians on staff... it doesn't matter how many times they pull a rabbit out of their hat... it only takes one failed rabbit out of the hat to sink your investment.

Lesson 3: No matter how much you believe in a company or industry, don't completely overload on it. Even if you know for a fact that silver is going back to $50 an ounce, or oil to $200, that doesn't necessarily mean those companies that operate in those industries are guaranteed success.

Lesson 4: No matter how good a business is, if you don't completely trust management to have your best interests at heart, are they really the best place for your money? Guessing perhaps not.

Lesson 5: Past performance is no indication of future performance... old addage of course, but it's sometimes seems "easy" to read the signs of QE and ECB policy and determine where you think the economy is going... there are a lot of moving parts... and they don't necessarily synch up like they're supposed to most days... see lesson 6.

Lesson 6: The market can be irrational... and can stay that way longer than most common investors can stomach... ATPG could win a suit against the government, ramp up production... blah, blah, blah... but they didn't do that quick enough... I wonder if I'm smart enough to follow a stock after a day like today... pretty darn sure I'm NOT smart enough to follow a stock into and out of BK... which is about 80% of the reason I sold today... even if all the stars aligned, and I spent 4000 hours figuring out how things were going to be (riiiiiiight) and that common shareholders would be made partially whole and I quadrupled my holdings? To what end... only having an 85% loss... yeah... No Thank You!

Lesson 7: The signs were there... shares of ATPG ended the year around $7... at a minimum, I should have lightened my position from 6x a normal position to say 3x. It's always easy, with hindsight, to go back and say what if... but the major flags (like Isreal) should have (at least for me) triggered a bell.

Lesson 8: Treat each investment individually. At least as far as the decision to buy or sell... portfolio balance is a different discussion, but don't let your losses or gains in one stock push you in a specific direction on a totally different stock that has different rules. When I thought Greece was going to default, I pulled 80% of my funds out of the market, and the 20% I had in, was invested in gold and silver stocks, physical silver and oil (ATPG). My belief in QE's effect on the markets notwithstanding, I may have made a different decision on ATPG had I evaluated them individually prior to evaluating them as part of my overall portfolio.... like oil AND hate ATPG would have been solid... even if my portfolio had to go without oil for a while while I researched an alternative... which is humorous in a way since my current portfolio doesn't have any oil... sigh...

I could go on, but I believe I've digressed past lessons re-learned on ATPG into simply rambling... for those of you that lost a little or a lot on ATPG, I'm sorry... I feel your pain... I honestly thought there would have been asset sales etc, prior to us finding ourselves here at the end of a long dirt road... funny thing about all this is I'm not bitter... because for me, getting mad doesn't get me anywhere... If I don't learn from this mistake (hopefully enough to gain back losses) what have I accomplished? And how foolish? With my DNDN losses, it was a binary event that I was sure that would come to pass that didn't... that lesson was easy compared to ATPG... so I'm going to soldier on... work diligently on deversifying into some property (which I view as one of the best places for new money under the right circumstances) and try hard to think of ATPG each time I buy a new stock.

Chris
The proceeds from the sale went into SLW shares... for those curious.
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Author: TMFBreakerRob Big gold star, 5000 posts Old School Fool Home Fool Supernova Phoenix 1
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Subject: Re: The light at the end of the tunnel... Date: 8/24/2012 4:50 PM
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The proceeds from the sale went into SLW shares... for those curious. -- Chris

It pains me to hear how you and others have lost so much with ATPG.

FWIW, until recently I was selling SLW puts. I suspended the sales for a while because I wasn't sure if it would sustain it's rise out of the $26-$29 trading range.... although I can't say it's overpriced at the current $34 (20x 2012 EPS). Good luck with it.

Rob

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Author: AirForceFool Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5086 of 5166
Subject: Re: The light at the end of the tunnel... Date: 8/24/2012 5:11 PM
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Rob old timer... hope life is treating you well...

Yeppers on ATPG...

As for SLW (from the news):
The company earlier this month reported it had acquired 100% of the silver production from Hudbay Minerals' currently producing flagship mine, 777.

Plus we have the pending Mexican decision on tax rates... which would be a huge catlyst if they tax based on $4 silver. Agree with you on watching the price... never hurts to NOT overpay for a stock... the only two stocks in my wife's IRA was SLW and ATPG, so it wasn't much of a decision to roll it over into SLW... the amount wasn't worth picking a new stock at this time since I've maxed out the $5K for her account this year... I'll pick something new the week after Christmas :P

Was selling puts by the dozens 2 years ago... when the market got volatile, I stepped back... just didn't want to get in to deep with the swings... was a smart move on my part... but obviously a good way to pick up shares cheaper...

Here's hoping those that have lost on ATPG have a safety net (ie, long career ahead of them, other stocks that are kicking butt, or as in my case, retirement checks that will augument the portfolio).


Appreciate the sentiment.

Chris
Long SLW... but not ATPG :P

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Author: TMFBreakerRob Big gold star, 5000 posts Old School Fool Home Fool Supernova Phoenix 1
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Subject: Re: The light at the end of the tunnel... Date: 8/24/2012 5:46 PM
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I missed the new agreement that SLW has. That's good to hear! I need to look at it again..... and I should have looked for a reason for the rise. Thanks. :)

I've got another company waiting for a favorable Mexican ruling: PPP. Here's a write-up: http://www.fool.com/investing/general/2012/08/03/a-gold-meda... Bought it on July 30th for $3.47 in an account I'm building up. (I picked an account just under $10k and I'm showing people at several Fool services what I'm doing as I try to build it to $100k). Anyway....PPP is making a decision on a major expansion this quarter..... and they're waiting on that tax decision since they're selling silver to SLW for $4 and being taxed at the market rate. Just a thought starter.

Regarding the put sales, it's strictly an income operation. When I'm put to, I sell calls..... so obviously I'm selective on which companies I work with.... I have to be happy owning them. So far, the proceeds exceed my retirement needs by a good margin, but I've made mistakes when I try to stretch too far on risk. I'm getting better...... I think.

So, yes. Life is good. I enjoy investing, I'm now part of one of the portfolio teams at Supernova..... but best of all >>> as of August 5th, I'm a grandpa of a little guy! We've established a second home in the Charlotte area to be near our daughter's family and we're putting our Michigan place up for sale. And, my daughter and her husband have inspired me to take up running (he ran Boston this year). I hope to be able to run the 2013 Flying Pig Marathon (half marathon actually) instead of walking it as I did last May. I've got a training plan that is helping to slowly expand my capabilities.... :) .... but I'm still super slow. Going for distance first.

Rob

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Author: istraveler Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5088 of 5166
Subject: Re: The light at the end of the tunnel... Date: 8/24/2012 10:54 PM
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Hello Chris,

I too ... followed this dog down to the end of this dirt road.

Your story and thoughts parallel mine. Today, I sold all remaining ATPG shares, a loss of about 6 months salary. I'm wounded but will be fine.

In hindsight, I feel blessed some of my shares were sold in April. I was following ONE of my rules .. which is ... sell your losers first. ATPG qualified. However, I would definitely felt better if I'd sold all shares last year ~ sometime before Fat Tuesday 2011 ... but did not.


I this time, I once again would like to acknowledge the petrochemical industry education, thoughtful insight, and transparent opinion freely presented on this board by Robert ...aka TMFDoodleBugger. Thank you Robert.



istraveler

still holding these energy related stocks ATW, UPL, HEK, LINN, KMP, WPRT

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Author: techpatriot One star, 50 posts Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5089 of 5166
Subject: Re: The light at the end of the tunnel... Date: 8/25/2012 9:41 AM
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Chris, the MF guy writing about PPP, also follows and holds TC.

TC is worth a look for those looking to get back some of ATPG losses.

(For the record, I exited ATPG with a nice profit, got back in, exited with a slight profit, kept watching it, as I like the story, but had no conviction in the stock. Bought a little preferred and SHOULD have sold it at a nice double, but instead to a minor loss on it as the company tanked and have been watching the train wreck with sadness.)


TC is for the patient investor. Chris and I still think it can be a potential 10 bagger (from the bargain basement prices it is at now) but you will need to hold it for a few years to realize that. If you want to exit in 2014 or 2015, you should have a nice 4 or 5 bagger from these levels even if gold stays flat and the world economies continue to suck. (A technical term meaning to underperform, LOL).

There is plenty of information on this board and off, regarding this stock, but in a nutshell;
TC is a profitable Moly producer that bought Gold and Copper properties at a great price hoping to diversify. A perfect storm of CAPEX escalation across the mining industry, and an unpredicted drop in global moly prices along with a large CAPEX project at one of their existing moly properties forced them into dilutive financing arrangements in order to continue to develop the primary property and complete the upgrades at their moly mine. Meanwhile, the other mine developed a slough, slowing down production at the worst possible time.
They are currently all but done with expansion and repairs at the moly mines, and are on target to start shipping copper and gold in Q4 2013 from the new mine. Additionally, they will also have two of the newest, most efficient and technologically sophisticated ore processing systems (SAG Mills) in North America, and globally too, at that time. One in a moly mine and one in a copper-gold mine, the investment of which should help them to maximize both of these resources to their fullest.

So much for a nutshell, eh? :-)

Anyway, check them out, they are currently trading around 1/3 of book value, and my largest holding in my IRA. Been a painful year for this stock, but next year, and the year after should be fun.
(My next largest holdings are COP, AAPL, INTC, EXC, PSEC, and I own them at considerably lower prices than they are all trading for, I love yield and am not generally what you would call a speculator, although I have been a spectator at times! I also believe these are all still undervalued stocks, especially PSEC and AAPL.)

I've done a lot of research on TC, as has Chris, and we are both convinced this company will make it for 12 more months until it starts shipping copper and gold ore, and it is also so extremely undervalued right now it is hard to say no to.
There is enough material out there for you to research TC until you are comfortable. Hope it mitigates some of the pain of ATPG, I was hoping they would come back, they had so much promise, but were better at financing than running a company.

I have also been following SD for a long time (made money on that one as well) and am thinking it may be time to re-open a position in them soon.
I believe they are a little riskier than TC (unless M.R. gets elected perhaps) and TC has more upside percentage-wise, but I like SD quite a bit and expect to make some pretty good money there over the next several years. I also believe that now is a good time to go long on UPL, and I plan on doing so in the next 30-60 days as well.

GLTA Fools, and I hope this gives you some ideas and hope on climbing back out of the hole, I have been smacked around and done it a few times myself!

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Author: TMFBreakerRob Big gold star, 5000 posts Old School Fool Home Fool Supernova Phoenix 1
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Subject: Re: The light at the end of the tunnel... Date: 8/25/2012 9:51 AM
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While we're discussing alternative investments, one of my current favorites is STX, given a nice write-up here by Peter (and given Post of the Day): http://boards.fool.com/seagate-stx-30200483.aspx?sort=whole

I've got a minor share position and a much larger series of different call positions. Not going to be a ten bagger, but we've already got the company pulling down solid profits (instead of waiting for something to work out) and it's a question of the investing community deciding that those profits are sustainable. Pays a dividend to boot.

In addition to reading the thread, check out the links. I think it's an impressive investing thesis and certainly worth at least adding to a watch list.

Rob

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Author: JustMee01 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5092 of 5166
Subject: Re: The light at the end of the tunnel... Date: 8/25/2012 10:53 PM
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Hey Rob,

Congrats on the arrival of the little guy!

I haven't opened a Seagate position yet. Next week I will. I've decided on an opening position with a covered call, but I haven't yet decided on the option. Any advice? I was going to go for the January 41 contracts, with the idea that it had a decent premium ($1.23 as of friday) and was pretty umlikely to be called. Even if it got exercised, I wouuldn't cry too hard with a 23% return...

Then I noticed the October 37 contracts paying $1.19. Hmm. This market isn't exactly tearing it up. That's a $3 move to get them in the money. And if they got exercised, I'd get an 11% return in 56 days. Once again, nothing to cry about, and the position could be reestablished. I'm not an options wizard. Heck, I'm barely literate.

In a sideways market would you go short term and near the money, rolling new calls, even on a stock you wanted to keep? It seems safer to stay out of the money on longer dated options with ones that you'd like to hold. What's your preference when you write your calls? Is there any formula or process that you subscribe to?

Peter

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Author: TMFBreakerRob Big gold star, 5000 posts Old School Fool Home Fool Supernova Phoenix 1
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Subject: Re: The light at the end of the tunnel... Date: 8/26/2012 9:05 AM
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Thanks, Peter. A benefit of grandparenting is not having to deal with 3am feedings, but enjoying him during the day. LOL He's been a little cranky even during the day recently though, making it hard on my daughter who looks pretty tired, but still has a great attitude.

You can see my STX positions on my profile. I've been selling puts for income and buying calls for gains.

Generally, I'm selecting ITM (in the money) calls that expire post-earnings.... and I'd prefer long dated ones because the market isn't convinced that the company's performance is sustainable. In other words, I'm selecting calls that I think have the best chance of riding an upward move in the underlying stock.

With puts, I sell very close to the current stock price to maximize the premium and even sometimes sell slightly above the stock price. If put to, I'll sell the calls. Why do I then sell calls instead of holding the stock? The put and call operation is strictly an income generator and I'm not trying to maximize capital gains over time. In this market, I've found it to be ridiculously profitable. I've got around 15% of my portfolio working to generate income this way and it has been producing around 150-175% of my income needs. If the market goes up, I can improve on that, if it goes down a bit it might slow me down. If the market goes down a lot, it may cause me to suspend operations until things perk up..... necessitating a cash reserve for bad times. Worth looking at, IMO. The key is to only operate with companies I'm very happy owning.... because this approach practically guarantees you'll be put to from time to time..... and in a down market you might be sitting on the shares for a while. Again, my profile has all those positions listed. You'll note that the puts are all with September expiry. Short term premiums, repeated monthly, seem more profitable.

Rob

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Author: chk999 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5094 of 5166
Subject: Re: The light at the end of the tunnel... Date: 8/26/2012 10:02 AM
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The book It's When You Sell That Counts by Don Cassidy is worth it's weight in gold in situations like this. I highly recommend it.

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Author: AirForceFool Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5096 of 5166
Subject: Re: The light at the end of the tunnel... Date: 8/27/2012 3:24 AM
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Rob: congrats on the little one... nice to spoil them and give them back... I've got some PPP as well... not a lot... may need to add to the position... can't argue with selling puts and getting a stock for cheaper... agree that you have to be selective... and keep a fair amount of cash available... good luck selling the Michigan place, and good luck with the running... I hate running, but I do it because I don't want to be pushed around in a wheelchair in my sunset years...

techpatriot: appreciate the vector on TC... will have to give them a look. I kept ATPG for to long, so patience shouldn't be an issue...

Chris

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Author: enoch01 Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5097 of 5166
Subject: Re: The light at the end of the tunnel... Date: 8/27/2012 6:50 PM
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The proceeds from the sale went into SLW shares... for those curious.

Why?

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Author: AirForceFool Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5098 of 5166
Subject: Re: The light at the end of the tunnel... Date: 8/29/2012 10:27 AM
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enoch01,

At the time of the sale, the only other stock in my IRA was SLW. Since I already maxed out my yearly contribution, it didn't seem prudent to open up a new position in something with just $2K, so I added to SLW.

As to why I think highly of SLW: Countries are still printing money like there is no tomorrow. The ECB seems to be willing to do whatever it takes to preserve the euro. Many believe that the Fed is close to implementing QE3 in some form or fashion or another (Jackson Hole speach on Friday should be enlightening). While I personally think we're close to the bottom in housing in most areas, I think we're going to be flat for several years while the inventories correct. The unemployment rate stands at 8.3%***, but that doesn't account for all the people that have stopped looking for work or who are working less than full time and would like more hours. In some hard hit areas (like Vegas) the rate is near 15% before adjusting for other factors. With real interest rates at zero, no one is making any money on thier savings. Bottom line is I think the economy will sputter along in fits and starts with poor fiscal restraint from most countries.

Based on this, I am bullish on both gold and silver. Gold as a hedge against the downward spiral of paper money, and silver as a hedge, but also because of it's use in tons of products... RFID use of silver is expected to almost double to 11M ounces (by 2020)*, water purification and food hygiene is expected to double as well to roughly 95M ounces by 2020*... and all these are existing uses that we know will increase... let alone all the new uses we haven't come up with yet.

With the historic gold to silver ration at 1:16 silver would be north of $100 to justify gold at $1672. So if you belive in the ratio, either gold falls, or silver goes up...

One of my biggest beleifs in silver comes from the fact that not all silver is recovered. Some time ago, I read an article (can't find) that stated that it's only profitable to recover silver north of $50 an ounce. So each cell phone etc, that gets tossed into the garbage, or sits in the box in the attic is taken out of the supply. Don't get me wrong... companies that use RFID tags can reuse certain models etc., but imagine if packaging gets to the point where Wal-Mart RFIDs every item in the store (near flawless inventory, perhaps reducing shoplifting to near zero (read a survey that stated 11% of shoppers shoplift... found that mindboggling)).

So I think silver is going back to near $50 over the next couple of years if not sooner... SLW, as a silver streaming company pays large amounts of cash up front for the right to buy silver at an average price of around $4 an ounce...

From Silverwheaton.com: "Based upon its current agreements, forecast 2012 attributable production is approximately 28 million silver equivalent ounces, including 42,000 ounces of gold. By 2016, annual attributable production is anticipated to increase significantly to approximately 48 million silver equivalent ounces, including 100,000 ounces of gold. Beyond the initial upfront payment, no ongoing capital expenditures are required to generate this growth and Silver Wheaton does not hedge its silver production."

So how do you get a sweeter deal than silver at $4 an ounce? you get a lesser amount of gold at $300 an ounce... boo-ya!**



Sorry, did not mean to make this a long-winded rant about SLW... but I figured I had a chance to type something positive on the ATPG board for a change :P



Chris: slinking back into hole now...




**http://www.silverwheaton.com/Theme/SilverWheaton/files/docs_...

*http://www.silver-coin-investor.com/silver-demand.html

***http://www.tradingeconomics.com/united-states/unemployment-r...

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Author: enoch01 Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5099 of 5166
Subject: Re: The light at the end of the tunnel... Date: 8/29/2012 12:21 PM
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Thanks for the follow-up. Trying to forecast reasonably the price of silver is in my too hard pile currently, but I'm interested to listen to what others think.

Cheers,
E

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