Last Valentine’s Day a panicked lover, and TradeStops subscriber, wrote in to say:
Getting tested today as my NAK stock that was up 300% has fallen by 30%. Hoping it’s a flash crash, so I’m not going to panic. But OUCH!
NAK is Northern Dynasty Minerals – a widely held junior gold mining stock with a compelling mining opportunity in Alaska.
It’s easy to fall in love with a stock like NAK. It’s been recommended by at least two highly respected investment advisory services. It controls the world’s largest undeveloped gold deposit … and that deposit is in Alaska, a place where there’s a reasonable hope of actually extracting the gold. There is also some hope that regulatory burdens may be lightened under the Trump administration.
It’s also been up over 500% in the past six months.
Believe me, I’m all for love. Investing should stir the heart. But as in all romantic relationships, we need to be clear about the rules of engagement.
That’s where TradeStops enters the picture. TradeStops establishes the boundaries within which investing romances can flourish … and the terms on which the engaged parties can agree to go their separate ways. TradeStops is like an investor’s prenup.
Let’s take a look at how TradeStops helped thousands of subscribers keep their relationships with NAK alive when a shock event threatened to derail the budding romance.
Just to get us visually oriented here, let’s take a look at the current SSI chart on NAK.
NAK has been recommended by a couple of prominent investment advisory services with large readerships. One service recommended it at $0.74 per share and another at $2.05 per share.
Thousands of TradeStops subscribers have positions in NAK … many of them up hundreds of percent.
NAK is one of the highest volatility stocks I’ve ever seen recommended in a widely read investment advisory service. Its TradeStops Volatility Quotient (VQ) is currently 72.2%.
That means that investors in NAK should be prepared for a correction of up to 72.2% if they intend to hold the stock for a year or more. Like I said, it is a very volatile stock.
Last week, on Valentine’s Day, a New York-based hedge fund came out with a scathing critique of NAK … and announced that they were shorting the stock (i.e., hoping to profit by the stock falling in price).
NAK fell as much 40% on Valentine’s Day, February 14. It had closed at $3.18 the day before and it hit an intraday low of $1.92 on February 14, before finally closing at $2.50.
So … what was the TradeStops response to the wayward behavior of NAK this past Valentine’s Day?
“Ho hum … That’s to be expected.”
Let’s take another look at that SSI chart on NAK …
NAK hasn’t even dipped into the SSI Yellow Zone yet.
I’m sure that many investors in NAK sold in a panic this past Valentine’s Day. Many of them probably got out near the bottom range of the day around $2.00 per share and then had to watch NAK rise into the close to $2.50 per share.
I’ve said it before, watching the prices of stocks intra-day is bad for your health … and bad for your portfolio.
True love requires trust. Given that we’re not all saints, trust between partners requires boundaries. TradeStops provides investors with the boundaries required to let love … and profits … flourish.
Investors in NAK with a plan to sell and the right position sizes for their portfolios had nothing to worry about this past Valentine’s Day. It was all part of the normal expected course of business.
Richard Smith, PhD
CEO & Founder, TradeStops