Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19
Is the Stock Market Making a V-shaped Recovery? - 11th Aug 19
Precious Metals and Stocks VIX Are About To Pull A “Crazy Ivan” - 11th Aug 19
Social Media Civil War - 11th Aug 19
Gold and the Bond Yield Continuum - 11th Aug 19
Traders: Which Markets Should You Trade? - 11th Aug 19
US Corporate Debt Is at Risk of a Flash Crash - 10th Aug 19
EURODOLLAR futures above 2016 highs: FED to cut over 100 bps quickly - 10th Aug 19
Market’s flight-to-safety: Should You Buy Stocks Now? - 10th Aug 19
The Cold, Hard Math Tells Netflix Stock Could Crash 70% - 10th Aug 19
Our Custom Index Charts Suggest Stock Markets Are In For A Wild Ride - 9th Aug 19
Bitcoin Price Triggers Ahead - 9th Aug 19
Walmart Is Coming for Amazon - 9th Aug 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Investor Portfolio Diversification is Essential, Don't Put All Your Eggs in One Basket

InvestorEducation / Learning to Invest Oct 28, 2010 - 08:42 AM GMT

By: Dudley_Baker

InvestorEducation

The natural resource sector has been performing extremely well of late and we are of the opinion that we are still in the early stages of an explosion in share prices. Gains of 100's of percent will be common but not without some risk.

Each investor must decide their own level of comfort and risk tolerance as measured again the potential gains to be made in the coming months.


Diversification provides investors with a means of spreading their risk while still having the potential for some outrageous gains.

We have been extremely bullish on the natural resource shares for many months and have many happy subscribers but we continue to stress the need for diversification, even if within the same sector.

The expression 'don't put all of your eggs in one basket' is always of great concern and as a general rule we would advise never placing more than 5% in any one investment. Never allow one investment to possibly destroy the value of your portfolio. We understand that many times you will be tempted due to a belief that 'this one' is going to the moon but you must spread your risk so you can sleep at night. Currently, we have over 80 different investment positions substantially all in the shares or long-term warrants of natural resource companies and while we are heavily weighted to this sector we are strong in our view of more gains to come. That said, we are ready to close out many positions if we sense the markets are due for a major downturn.

Diversification will mean different things to different investors. How much money you have invested or to be invested will be, in our opinion, a very controlling factor. Let take a few minutes and break this down into 3 categories of investors with $25,000 or less, $50,000 to $100,000 and $100,000 and above. Remember, we are very aggressive in our views of the direction of the markets and it is reflected in our suggested investment allocations below.

Investors with $25,000 or less: Assuming this is your risk capital we believe you should be aggressive at this time in the natural resource sector.. Let's face it; making 10% return on your money will not change your life. You need some 'homeruns' of 100% to 1,000%. A basket of shares and/or long-term warrants on 4 to 6 different companies will give you some diversification with good up side potential.

Investors with $50,000 to $100,000: Again assuming this is your risk capital, we would suggest a core holding of say 20% in bullion. If you currently do not have any bullion, i.e., gold or silver coins, we would suggest buying the silver coins in lieu of gold. Take another 30% and invest in a small basket of the large producing gold companies, some of which are now paying dividends. Finally, we would take the balance of 50% and buy a basket of six to ten of the shares or warrants trading on the natural resource companies.

Investors with $100,000 and more: With more monies to invest you will have more opportunities and can spread your risk to more positions. Again, we would suggest a core holding of around 20% in bullion, a 40% to 50% allocation to the large producing gold and silver companies and the balance of say, 30% to our favorite allocation, the smaller juniors and exploration companies. This 30% must again be allocated to a minimum of 8 companies thus giving you the opportunity for exceptional gains but yet limiting your risk on any one position.

Remember the above guidelines are our personal views and may differ from the views of other analysts or your financial advisors. We know we are aggressive, but strongly believe this is the time for investors to be aggressive, if, you can handle the comfort and risk tolerance as discussed above.

We are being given the rare possibility of a once-in-a-lifetime-opportunity, what will you do with it? If we can assist, join us on this exciting journey.

PreciousMetalsWarrants.com provides:
1. An online database for all warrants trading on the natural resource companies in the
    United States and Canada. Our database is the most comprehensive database that
    you will find.
2. In addition for our Gold Subscribers we provide:
    A. "A Look Over My Shoulder" - This is my entire personal portfolio and I provide an
         audio update each Thursday evening and emails as I buy or sell securities or
         warrants. Each subscriber can decide whether to follow me but this is your
         decision and we suggest that subscribers do their own due diligence before
         buying any securities.
   B. Insiders Trading Data:
       We track the insider trading on the Canadian Securities and issue BUY and SELL
       Alerts as we deem necessary. We have a great track record of approximately
       100% gains on all closed trades.

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

Dudley Pierce Baker
Guadalajara/Ajijic, Mexico
Email: support@preciousmetalswarrants.com
Website: PreciousMetalsWarrants
Website: InsidersInsights

Dudley Pierce Baker is the owner and editor of Precious Metals Warrants and Insiders Insights. Articles are written by Dudley Baker along with contributing editors, Arnold Bock of Mendoza, Argentina and Lorimer Wilson of Toronto, Canada. PreciousMetalsWarrants provides an online subscription database for all warrants trading on junior mining and natural resource companies in the United States and Canada and a free weekly newsletter. InsidersInsights alerts subscribers when corporate insiders of a limited number of junior mining and natural resource companies are buying and selling.

Disclaimer/Disclosure Statement:PreciousMetalsWarrants.com is not an investment advisor and any reference to specific securities does not constitute a recommendation thereof. The opinions expressed herein are the express personal opinions of Dudley Baker. Neither the information, nor the opinions expressed should be construed as a solicitation to buy any securities mentioned in this Service. Examples given are only intended to make investors aware of the potential rewards of investing in Warrants. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions involving stocks or Warrants.

Dudley Pierce Baker Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules