AFA: Afri-can marine minerals

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AFA: Afri-can marine minerals

Post  lukera on Fri Oct 29, 2010 1:54 pm

Well after 3 solid weeks of fighting with scotia to get my account set up I was finally able to get it going today Smile

I had $50 in the account which i used to open it so i had to put it on something.

Now keep in mind I know this wasn't a very wise move on my part but I just wanted my money out there.

so I put it into Afri-can marine minerals.

now I can say i'm investing along side you guys (albeit on a 10000:1 ratio).

I look forward to making wise investment desicions from here on out!


I suppose this doesn't belong in "trade of the day" but seeing as how it is my only trade, i get to put it in here Wink


Last edited by lukera on Fri Oct 29, 2010 1:56 pm; edited 1 time in total (Reason for editing : wrong category)
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Re: AFA: Afri-can marine minerals

Post  Fred on Fri Oct 29, 2010 5:31 pm

Congrat's on your first trade! Always keep in mind that others will be more pesimistic about your trading decisions than you. One thing that I listen to is my gut instinct... sometimes I have to sit and listen to it for a few days before I make up my mind. Sometimes I tell myself to f-off and start over.

It's the kind of instinct that told me to by ROK yesterday... 100,000 shares.... the most shares I've ever owned in one company. It feels like it's worthy of the trade of the day. Also bought IZN two days ago. You see the thing is, that I can't be posting on this forum and expect to get the answer I want immediately, so I follow my gut. Then its show and tell on the forum. It's a calculated instinct, and sometimes I get lucky too.

Cheerio from London.

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Re: AFA: Afri-can marine minerals

Post  lukera on Fri Oct 29, 2010 7:13 pm

Damn Fred, you rock.

I also meant to say 100 000:1 ratio Wink

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a conundrum

Post  Fred on Fri Oct 29, 2010 7:59 pm

I remember reading a few articles about Warren Buffet. He (and many of his followers) explained how he usually owned approximately 10 stocks. The ammount invested in each ranging, but only in extenuating circumstances, would he ever decide to invest more than 10% of his portfolio in one stock (*). Now, at the begining that is a bit difficult... and it continues to be difficult for two reasons:
1. You don't have enough money to diversify 10 ways and still consider it profitable.
2. As I am learning, if I am going to invest approximately 10% of my protfolio in one stock (maybe in more than one order, in more than one day), then I have to stomach that I am now playing with three or four months earnings in a single shot.

I am contemplating and deciding between investing too little or too much... SO much so, that I am scared and second guess myself too often. These two contradictory troubles can be brought back to doing your homework, watching your preferred indicators and being patient (**).

(*) I understand that this is contradictory: if you have 10 stocks or less that it is impossible to follow this rule unless you don't invest your entire portfolio... i.e 10 stocks x 10% = 100%. FYI, I have never been invested more than 13 ways. It is a lot to follow if you are following it closley... keep in mind it is both a benefit and a hindrance to follow it so closely (you'll learn that on your own).
(**) I cannot stress how much patients is a virtue. You need to learn your limits and your own strategy. If you are trying to make a few $ quick and are unsure... sell at a profit. If you are sure about your decision, wait!

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Re: AFA: Afri-can marine minerals

Post  Max on Fri Oct 29, 2010 11:06 pm

Congrats Luke on getting set up.You might want to take it easy and accumulate some cash for a little while as all signs point to a bumpy ride with the next round of stimulus.

Fred, that sounds like some good advice. Patience is not my favourite virtue, and I often sell stocks early and am right now almost scared out of the market.

I have to respect your success from your intuitive picks, but it is performance like this that drives value guys like me crazy. All the laws of financial analysis and the universe in general say your picks should crash and burn, but you continue to turn up winners.

You are right, I am negative on most stocks, but I try to be careful to explain my reasoning. It only goes to show that financial analysis is not everything when it comes to picking stocks.

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Re: AFA: Afri-can marine minerals

Post  Max on Fri Nov 05, 2010 1:33 am

OK, I took a look at Afri-can Minerals. Rather than give a discouraging analysis, I think it would be better to analyze which of the following led you to buy this company. As a test, see if you can point out the flaws in the following statements.

1) Share price is $0.05. Can't go much lower than $0.05, and could potentially make 50x my money.

2) What a clever name: Afri-can. Anyone who could come up with an awesome name like that should be able to think of creative ways to make me a profit on my invesmtent.

3) Teck Cominco. Weren't they mentioned somewhere in a partnership? If they are good enough for Teck, they are good enough for me.

4) Diamonds? I like diamonds; they are shiny and awesome and these ones come from the sea and not some slave labour camp like I saw in that movie Blood Diamond with Leonardo DiCaprio. He is such an awesome actor. Him and Djimon Honshu. What a team. What was I talking about again.... Oh crap, I hit the wrong button and bought some Diamond mining company called Afri-can Marine Minerals!

5) Look at the charts! If you go back far enough, this stock was worth way more than it is now. It is only a matter of time until it recovers to the true price of $0.40 per share. I am gonna be so rich that if anybody gives me a hard time I will buy the company they work for just so I can fire them.

6) The news says recent survey results are good. I bet that no one else knows about that, so if I am quick, I can get in before all the other investors figure it out. Google news is completely reliable and publishes before any other news service, right?

7) Leave me alone a-hole, I only had $50 to invest where else am I going to put it.

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Re: AFA: Afri-can marine minerals

Post  Max on Fri Nov 05, 2010 1:34 am

P.S. I am pretty sure I have bought stocks for each one of these reasons myself.

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Re: AFA: Afri-can marine minerals

Post  lukera on Fri Nov 05, 2010 7:18 am

HAHA Max, i had a good laugh at that.

But seriously, i would have to say reasons #1, #5, and #6 (with the exception that i don't think i will be doing anything before anyone else does).

I have been looking at stocks every night now for hours on end with the help of wikipedia and this forum to decipher what alot of the terms mean.

All I have come up with so far is that I understand very little, and like you say I should wait awhile to build up some money before I go and pick another stock.

I bought in at $0.065 which i don't think is too bad but I thought at the time I bought it was at $0.060.....oh well.

From what I can understand is that you need money to make money. I don't have that much disposable cash so I need to look at a way to generate money.

OTC and pink sheets are what I am researching right now and hopefully I will be able to understand how it works well enough to make some kind of informed desicion in the near future.

Getting back to the reasons I bought this particular share:

#1 - The flaw here is that the share has a very real possibility of dropping below $0.05 or More! it could be $0.00! the company is only in the second stage of exploration in their survey area that shows promise. . . there is a long way to go.

#5 - The flaw here is that the charts are history. While there are ways to analyze the charts to make informed decisions, I don't know these ways yet.

#6 - The flaw here is that the news is available to everyone so if it was that good everyone would have hopped on the band wagon by now and bought. I can only see the news everyone else can see (maybe less).


***as a side note. Congratulations Max, you made the 100th post on the forum!!!
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Re: AFA: Afri-can marine minerals

Post  Max on Sat Nov 06, 2010 9:39 pm

Lessons here are:

1) It is more important to look at the number of shares / market cap (# shares x current stock price). From this you can determine if the stock is over/undervalued and how sensitive it is to dilution from issuing additional shares and also how sensitive the stock will be to increased earnings. If $5M in net income / 500M shares = $0.01, and you have an estimate of how much you expect earnings to increase, you can project the effect on the stock price. Just because the price is $0.05, you still might have so many shares outstanding that it will take a huge movement in earnings to move the stock.

2) Picking stocks based on name is dumb, but we have all done it at some point. I am sure you know this already, but just to make sure you keep it in mind the next time you are tempted.

3) Partnership with a giant company doesn't mean much. Probably the larger company has the negotiating leverage to demand terms that might not be favourable for the smaller company. Probably the larger company is taking a partner on the project rather than buying it outright, since it considers the venture too risky to waste their own time with. There are as many good reasons as bad for having a giant partner.

4) Projecting the positive traits of the product/industry onto the company can be dangerous. While it is important to know the industry the company operates in, you also have to consider each company on a stand alone basis.

Also, I have bought the wrong stock by mistake while distracted before. If this happens, do a quick check to see what you bought before selling it. Fortune seems to be kind to those of us stupid enough to make this mistake (based on my own experience and from what I have heard from others who have done the same thing).

5) Things change. The stock may have been $50 and then sold off a prized asset and distributed all the cash as a dividend. Does this mean it will reach $50 again in the future after it has fallen to $5. No. There are many reasons the stock can be down a long way from its historical high. Be very sure you know why before investing for the long term on a recovery.

6) As Fred has mentioned before, the news is full of world-class manipulators trying to play on your emotions (primarily fear and greed). These guys are good, and know just what to say to get you panicked or to get you thinking you are just about to miss a once in a lifetime opportunity. For sure you have to act fast to be successful, but not reckless. Just keep in mind that almost everyone posting news is an investor themselves. They will try to do whatever makes money for them, not for you.

7) OK, so it is only $50, why not go for it? Because this is gambling. Gambling is relying on chance (usually with odds not in your favour, and with stocks the odds are usually much worse than a casino). It is a lottery ticket with a much lower potential payout and a much higher cost. Investing is about risk vs. reward tradeoffs that will result in a positive expected value (25% chance of $5 profit vs. 75% chance of -$1 loss is a good bet). If the odds are in your favour, then the more you play, the more you win.

Max
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