I wrote in a previous post, 5 Things You Need to Know to Buy Canadian Stocks, that the biggest returns are made when you buy at the right time and price.
Doug Casey, founder of Casey Research, has often spoken of “summer shopping season”.
What he is referring to is the tendency of the entire Canadian stock exchange and investment/brokerage community to pretty much take the summer off. The result is very low trading activity and even times when quality companies will go “no bid”. That can make the value of a specific Canadian stock appear to be zero even though no one would be willing to sell it to you for that.
What it does mean, though, is that anyone needing to sell their Canadian stocks during this seasonal slow period, or uninformed and panicking over the lack of trading or price, is not going to get a very good price for the stock they are selling.
The buyer, however, can get a great deal. You want that buyer to be you.
The way you get those super low prices are by placing “stink bids” or bids substantially below the normal market price for a security. Many times one will determine what the stink bid price should be by using some technical analysis.
Having that stink bid in place can mean that all of a sudden one day you get filled with a stock you want to buy at a very good price that you are happy to pay. That particular “tranche” of that investment likely to end up being the best performing tranche due to your below normal entry price.
Right now we are still in the middle of the “summer doldrums”; does that mean that shopping season is among us? Well, not really. In fact, if you look at price activity since May, most quality junior mining stocks are not down that much.
Of course you may point out that many have not recovered that well from last year’s financial implosion, and you would be right.
There is speculation, however, that we may still see a further weakness in these Canadian mining and resource companies that provide better entry points for profitable trades.
One can never know for sure, but if you are interested it may be in your best interest to perform your due diligence on the Canadian stocks you want to buy and then place your “stink bids” such that if prices do collapse you will benefit from the lower prices.
The best way to stay tuned and know if it really is the best time to buy and which Canadian stocks would fit best in a resource oriented portfolio is to hire an investment pro who specializes in this area.
Why not take a look at Casey’s Gold and Resource Report right now and see how you could benefit from their boots on the ground style of reporting.
It’s risk free.
