Beware of THE NUGGET EFFECT

Re: Beware of THE NUGGET EFFECT

You are right Frank about "forward looking news announcements" and even though all companies DO have an investor warning concerning such statements, even on their own websites, they can be used by unscrupulous companies using legitimate information on "new findings" to lure gullible or less sophisticated investors.  I have found that rather that chasing hot stocks it pays to be patient, assess a company with good drilling results and if it passes "due diligence" on all other points, waiit until the euphoria wears off, then put in a "stink bid" and the chances are you will get filled on a down day in the market at a price equal to or even lower that it was at the time of the positive announcement.

To give a personal example, what I find very helpful in the platform I use, Investors Edge from CIBC, is their Daily Alerts which show the companies with the highest purchasing volume, percentage of increase and break outs that show the percentage increase for that day, the past 3 months and results for the year on a percentage basis. With a trading cost of $6.95 it is in my view a great platform for informed investors doing their own research and due diligence.

IF a particular stock has a HIGH daily increase, say anything over 5 %, then assessing what it has done over the past 3 months gives you a perception on trend, and if that same stock appears more than once during a week then it becomes a "suspect" for purchase, particularly depending on what percentage it is still be low a year ago. I could pick any number of stocks just from todays list but will limit myself to just TWO to illustrate the point.

Wesdome Gold WDO is up 5% to day, 33% over the past 3 months, (indicating a strong trend) yet it is still 61% BELOW its high a year ago. Do your own due diligence on the company but since this has been a long time pick by Sprott, the information on their website relative to production, the percentages cited, financial position etc. this one goes on my buy list to acquire around a $1. if possible.  A second pick I have recently purchased (Sept 20th) is a company I owned years ago while it was still in the exploration category and did very well with. I SOLD near a TOP but after it  appeared on the CIBC Alerts at around 50% of where I had sold after going through some difficult times getting into production (which is not unusual) I was able to pick it up again @ $3.34.

I am referring to Copper Mountain in B.C. (CUM) which today appeared on my CIBC Alerts @ $3.86,(nice short term profit) up 3% for the day, but emphasizing my point, up 32% in the past 3 months, but here is the important statistic, still 30% BELOW its year ago high. Word to the wise, here is an "in production" company selling at well below its pre production high the market WAS negative on yet has advanced 32% in the past 3 months. What more information do you need that this is a good potential buy even if you are unable to get in at the price I did, but who knows, stink bids, a bad day in the market, who knows you might still get close, but if it eventually gets back to just where it was a year ago and you paid say $3.75 on a stink bid, would you be that unhappy?

Another way these statistics can be used to find good stocks to buy is when a stock you have never heard of before appears on the list for the first time, (as todays example is for me) showing metrics of being UP 5% for the day but minus 8% for the past 3 days and 22% for the past year.

This generates curiosity and the need to investigate the company thoroughly to determine WHY the company might be up in one day yet have a negative history. In this case I know no more than you do, (maybe less if you are following the company) as I have not yet done "due diligence" on VERIS Gold VG-V so I have no opinion whether it is worth consideration or not, but I intend to find out.