RIO passed its 52 weeks high worth selling?
05-04-2007, 07:42 AM
#1
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RIO passed its 52 weeks high worth selling?
Hi
I picked up some RIO shares at about 41.00 and now it's about 44.00. Is it worth selling my shares and pick them back up when it lowers?.
I picked up some RIO shares at about 41.00 and now it's about 44.00. Is it worth selling my shares and pick them back up when it lowers?.
05-04-2007, 08:05 AM
#2
Registered User
The burp in performance last few week was a result of a labor strike at a nickel mine they recently took over in Canada. This presented the buying opportunity that Erik recommended we take advantage of. This stock looks worth holding still as forward P/E is still relatively low even when compared with competitors. The main risk with this stock is a retreat in Nickel prices from their current historical highs. For what it is worth, I bought at the same price as you and plan on holding for the time being.
05-04-2007, 09:27 AM
#3
Administrator
I trimmed off 10% of my position today pretty much across the board including RIO at $44.22. I just wanted to scoop in some of my profits from the past two weeks. My basis however is $36. I don't think RIO has the sort of volatility that is suitable for trading around and if I were in with a $41 basis I wouldn't be selling it here as I don't think you'll be able to do better than $41 even on a pullback. If anything hang on to what you have and if it pulls back buy more.
The market for RIO's products is at an all-time high and only going higher. They are the world's #2 Iron ore producer and the world's #1 Nickel producer. Those two things equal one thing and that's STEEL. There is a worldwide shortage of steel expected to last through to mid 2008. Until that lets up RIO and steel related stocks are going to boom.
Put RIO away, trim for profits after 20%, 50% and 100% gains (after a double you should only be playing with the house's money) but otherwise look for opportunities to add to the position on pullback.
The market for RIO's products is at an all-time high and only going higher. They are the world's #2 Iron ore producer and the world's #1 Nickel producer. Those two things equal one thing and that's STEEL. There is a worldwide shortage of steel expected to last through to mid 2008. Until that lets up RIO and steel related stocks are going to boom.
Put RIO away, trim for profits after 20%, 50% and 100% gains (after a double you should only be playing with the house's money) but otherwise look for opportunities to add to the position on pullback.
05-04-2007, 10:37 PM
#4
Former Moderator
Originally Posted by cthree,May 4 2007, 12:27 PM
I trimmed off 10% of my position today pretty much across the board including RIO at $44.22. I just wanted to scoop in some of my profits from the past two weeks. My basis however is $36. I don't think RIO has the sort of volatility that is suitable for trading around and if I were in with a $41 basis I wouldn't be selling it here as I don't think you'll be able to do better than $41 even on a pullback. If anything hang on to what you have and if it pulls back buy more.
The market for RIO's products is at an all-time high and only going higher. They are the world's #2 Iron ore producer and the world's #1 Nickel producer. Those two things equal one thing and that's STEEL. There is a worldwide shortage of steel expected to last through to mid 2008. Until that lets up RIO and steel related stocks are going to boom.
Put RIO away, trim for profits after 20%, 50% and 100% gains (after a double you should only be playing with the house's money) but otherwise look for opportunities to add to the position on pullback.
The market for RIO's products is at an all-time high and only going higher. They are the world's #2 Iron ore producer and the world's #1 Nickel producer. Those two things equal one thing and that's STEEL. There is a worldwide shortage of steel expected to last through to mid 2008. Until that lets up RIO and steel related stocks are going to boom.
Put RIO away, trim for profits after 20%, 50% and 100% gains (after a double you should only be playing with the house's money) but otherwise look for opportunities to add to the position on pullback.
Also, on a minor sidenote, is it a goodtime to pick up FCX? They seem to be at their 52 week high....any thoughts?
05-05-2007, 06:56 PM
#5
Administrator
I think RIO and FCX are still good even where they are. However, before you buy wait for a pull back in price. It will be down 1 or 2% someday soon as people take profits. That's 1 or 2% in your pocket. If you're looking at 200 shares, buy 100 now and wait for a pullback to get the other 100. I never like to commit to anything all-in before the flop so-to-speak. If you buy for say $42 and 3 days later it pulls back to $38 (not saying it will but it could) then you can lower your overall cost basis to $40 by buying another 100 at the new lower price. If it takes off and goes to $46 then at least you are getting a taste even if it's not as much as you hoped. Risk/reward. By buying is stages you're lowering your risk at the expense of maximal potential profit. By committing it all at once you are being arrogant about the possibility that the stock could decline. I t wouldn't take but the Chinese Gov't cracking down on growth to send RIO down. In the end it's all good but investors can be jittery when the market is up as much as it is.
As a trader the thing you'll regret more than anything else is not getting in on a hot trade and/or not buying more of a stock which makes big gains. I'm up almost 40% on RIO since I started trading it in November when I bought it at $24, then sold it, then bought it again. Sure I wish I'd put it all on RIO back then but it would have been stupid. Consequently I don't have as much as I'd like to have given how it's done but I have as much as I was/am willing to risk on a single stock, about 15%. I'm not comfortable holding more than that but I can see how people might have 20% of their portfolio in RIO if they have fewer holdings.
No matter how good a stock looks it can always turn around and bite you in the ass if even for just a short time. It's nice to be able to convert that stress to joy by knowing you can take advantage of it. If all you manage to get it 100 shares then you need to learn to be happy with that because like I said it's something you'll have to deal with for every winner. When you pick a loser, and you will, be thankful you didn't bet the farm right off the bat and you'll cut your losses by 50%
As a trader the thing you'll regret more than anything else is not getting in on a hot trade and/or not buying more of a stock which makes big gains. I'm up almost 40% on RIO since I started trading it in November when I bought it at $24, then sold it, then bought it again. Sure I wish I'd put it all on RIO back then but it would have been stupid. Consequently I don't have as much as I'd like to have given how it's done but I have as much as I was/am willing to risk on a single stock, about 15%. I'm not comfortable holding more than that but I can see how people might have 20% of their portfolio in RIO if they have fewer holdings.
No matter how good a stock looks it can always turn around and bite you in the ass if even for just a short time. It's nice to be able to convert that stress to joy by knowing you can take advantage of it. If all you manage to get it 100 shares then you need to learn to be happy with that because like I said it's something you'll have to deal with for every winner. When you pick a loser, and you will, be thankful you didn't bet the farm right off the bat and you'll cut your losses by 50%
05-05-2007, 07:08 PM
#6
Administrator
Something else you might want to consider...
On Monday Uranium is going to trade as a commodity in the open market for the first time. You might want to put half in RIO and half in CCJ as I think the price of uranium is going to shoot up Monday morning as traders finally get to trade it and keep climbing. CCJ has been a great stock and it's about to do much much better. I already have Jan 08 $50 calls but I might roll those up to shorter term out of the money calls Monday.
On Monday Uranium is going to trade as a commodity in the open market for the first time. You might want to put half in RIO and half in CCJ as I think the price of uranium is going to shoot up Monday morning as traders finally get to trade it and keep climbing. CCJ has been a great stock and it's about to do much much better. I already have Jan 08 $50 calls but I might roll those up to shorter term out of the money calls Monday.
05-05-2007, 10:47 PM
#7
Former Moderator
Well...I have 25K allocated for stocks/Roth IRA. I have 2 shares or BRKB at $3630 each. I was planning on getting 100 of FCX, 100 of RIO, and maybe 1000 of CKSW as a gamble for the future. See anything wrong with this move? Maybe back of a little on RIO or FCX and pick up some CCJ?
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05-06-2007, 05:45 AM
#8
Administrator
First off, congrats on getting invested with a good chunk of cash 
You should try to balance each position for size. 7K in BRK.B which is mainly insurance and consumer non-cyclicals (there is a bunch of things mixed in). 7K in copper and other base materials, 4K in iron, nickel and other base materials and 3K is highly speculative software.
That makes over half of your portfolio base metals. You need to diversify that much more. I think you should pick either FCX or RIO but not both. Figure on 5K worth (75 FCX or 125 RIO). Take 5K and put it in something else like a solid financial, AMEX, MA, GS, JPM, WAMU, WFC, BA, etc. Take another 5K and go with something in agriculture like DE, MON, POT or perhaps a railroad like CSX, UNP or other.
You want to spread your risk and you should aim for not having more than 20% in any one related industry or sector. BRK.B makes that a little complicated due to it's value but I'd recommend the following:
subtract the 7.2K worth of BRK from the 25K and call it insurance. Divide the result (18Kish) by 4, so about 4.5K and invest each 4.5K chunk in a different diverse sector. RIO makes a good choice for base metals and 100 fits right into your budget. Stocks that I own and like:
GS - Finance - brokerage
NYX - Finance - exchange
AAPL - Technology/Retail/Consumer cyclical (it's not purely in any sector)
DE - Argriculture - Equipment
MO - Consumer non-cyclical - Tobacco - a license to sell crack
JSDA - Consumer non-cyclical
RIMM - Technology
RIO - Mining - Base Metals
VLO - Oil - Refining
RG - Communications - Cable/Internet/Telephone
AUY - Mining - Precious Metals/Gold
BRK.B - Insurance
BNS - Finance - Bank/foriegn
NBG - Finance - Bank/foriegn
As you can see I'm diversified across a number of sectors, Consumer non-cyclicals, Technology, Finance, Oil, Mining, Agriculture. Within each sector there is also diversification, for example base metals and precious metals don't trade in lockstep with each-other. Base metals are levered to economic growth while precious metals are levered to inflation or more specifically they are a hedge against devalued currency.
Also consider the foreign content composition. Try to keep that to a reasonable level. With things as they are I'd condone up to 40% of your portfolio be in foreign stocks. If the US economy ever starts to grow again then you can scale that back to 20%. Also keep your speculation to no more than 20% of you portfolio. If you're risk averse cut it back to 10%.
The point is spread your risk around as much as is practical for the amount of money you're investing and the amount of time you have to manage your portfolio. You are going to make your 25-35% annual returns by following the market, making sure you're invested in sectors of the economy which are performing well, buying only the best quality stocks in those sectors (that being the best management, the best products, the best balance sheet, the best performance, the best shareholder value) and by speculating a little on the side on companies which haven't performed but will due to some catalyst the market hasn't factored in yet (a new drug or late stage trial result, a turnaround, new management success, something like that).
It all takes a little bit of effort but is worth it in the results you will see. Start by making sure you listen to the conference calls. They aren't exciting but contain a good deal of information about what management sees going forward, what the risks and opportunities are and what went wrong and why.
You should try to balance each position for size. 7K in BRK.B which is mainly insurance and consumer non-cyclicals (there is a bunch of things mixed in). 7K in copper and other base materials, 4K in iron, nickel and other base materials and 3K is highly speculative software.
That makes over half of your portfolio base metals. You need to diversify that much more. I think you should pick either FCX or RIO but not both. Figure on 5K worth (75 FCX or 125 RIO). Take 5K and put it in something else like a solid financial, AMEX, MA, GS, JPM, WAMU, WFC, BA, etc. Take another 5K and go with something in agriculture like DE, MON, POT or perhaps a railroad like CSX, UNP or other.
You want to spread your risk and you should aim for not having more than 20% in any one related industry or sector. BRK.B makes that a little complicated due to it's value but I'd recommend the following:
subtract the 7.2K worth of BRK from the 25K and call it insurance. Divide the result (18Kish) by 4, so about 4.5K and invest each 4.5K chunk in a different diverse sector. RIO makes a good choice for base metals and 100 fits right into your budget. Stocks that I own and like:
GS - Finance - brokerage
NYX - Finance - exchange
AAPL - Technology/Retail/Consumer cyclical (it's not purely in any sector)
DE - Argriculture - Equipment
MO - Consumer non-cyclical - Tobacco - a license to sell crack
JSDA - Consumer non-cyclical
RIMM - Technology
RIO - Mining - Base Metals
VLO - Oil - Refining
RG - Communications - Cable/Internet/Telephone
AUY - Mining - Precious Metals/Gold
BRK.B - Insurance
BNS - Finance - Bank/foriegn
NBG - Finance - Bank/foriegn
As you can see I'm diversified across a number of sectors, Consumer non-cyclicals, Technology, Finance, Oil, Mining, Agriculture. Within each sector there is also diversification, for example base metals and precious metals don't trade in lockstep with each-other. Base metals are levered to economic growth while precious metals are levered to inflation or more specifically they are a hedge against devalued currency.
Also consider the foreign content composition. Try to keep that to a reasonable level. With things as they are I'd condone up to 40% of your portfolio be in foreign stocks. If the US economy ever starts to grow again then you can scale that back to 20%. Also keep your speculation to no more than 20% of you portfolio. If you're risk averse cut it back to 10%.
The point is spread your risk around as much as is practical for the amount of money you're investing and the amount of time you have to manage your portfolio. You are going to make your 25-35% annual returns by following the market, making sure you're invested in sectors of the economy which are performing well, buying only the best quality stocks in those sectors (that being the best management, the best products, the best balance sheet, the best performance, the best shareholder value) and by speculating a little on the side on companies which haven't performed but will due to some catalyst the market hasn't factored in yet (a new drug or late stage trial result, a turnaround, new management success, something like that).
It all takes a little bit of effort but is worth it in the results you will see. Start by making sure you listen to the conference calls. They aren't exciting but contain a good deal of information about what management sees going forward, what the risks and opportunities are and what went wrong and why.
