Hi All,

Yes I spelled that right. It is Movember. The time men of all ages have a reason to grow a moustache for a good cause, all to the chagrin of their spouses. We have an office full of people looking like Freddie Mercury circa 1980. All in support of prostate cancer research.

I have enjoyed reading the posts of the past few days. As I posted in a few musings back, Noront can be a real sweetie and a real heartbreaker, teasing each step of the way.

Not that I have ever been divorced, but I can imagine that there are a lot of former Noront ex-spouses on the sidelines waiting for their love to return. With a wink of an eye and a tease of a smile we are all hopeful that someday our past loyalty will bring us back to the place we once knew.. the happy place... the $7 share price. But like a rebound with an ex, you sometimes wake up the next morning and wonder why you went back one more time when nothing seems to change. :)

The psyche of a Noront investor is fragile. How could it not be? The company sits on one of the world's largest finds of Nichel, Copper, Precious metals and Chromite and the stock continues to disappoint. How can this be?

I remember the fear I had around the time of the hostile board takeover. My fear was not that others would be running the company. It was that others would dilute the stock by driving down the price and then providing cheap private placements and stock options to those companies associated with the board. While the stock options have not been cheap (I read through the AGM circular and can honestly say these guys are not here for the stock options at $1, $3 or $5), the amounts that Noront has diluted the company away since the takeover has been insulting to all. It has essentially allowed those funds who bought in at $4 and $5 private placements to average down significantly without worrying about driving the price up.

Private placements are a double-edged sword. The company gets much needed money to continue in business while at the same time the existing shareholders see their original investment diluted. Should the injection of cash bring results - the value of the company generally increases and the share price does better even with a higher outstanding share count. What has been frustrating about Noront is that the share price does not respond to great results. Almost every time great results have been released, the share price drops dramatically within a three to six month period.

My friends often ask me why I bother playing (as they call it) the stock market. Some say it is like a casino where you put your money on a bet and most times the house wins. I tell them that for large portions of the stock market this is true, and the analogy of the house having the better odds is correct. Hedge funds and the like controls the tables, the betting amounts, but not always the cards. To be in the stock market today means not only having to find a high potential company, but to watch and react to the hedge fund game whereby they will run a stock seven ways to Sunday in an attempt to make money on the way up and on the way down through shorting. This leaves the little guy with a sense of seasickness as the topsy turvy nature of the share price of a high potential company is without mercy.

To be good in the market takes some luck yes. But it also takes experience, instinct and an ability to handle emotions and pride. When I first starting investing I had a lot of emotion. I would battle the bashers on many boards who I felt were trying to discredit the company I had invested in. If they were going to spew half truths it was my duty as an investor to expose them as liars. Their half truths and lies made my holdings a target, and damn if I was going to let somebody weasle into my investment.

I am glad for my times on the boards as they taught me many things about myself, about pumpers and dumpers and bashers and even the criminally insane who would post.

A few lessons I learned along the way were very helpful:

Lesson One: Defeat is the best teacher if you choose to learn from it

There is no defeat in selling a stock below what you paid for it. I learned this the hard way with my very first investment. I had what I thought was perfect (insert the "I" word here) information. A friend of a friend at an airport in a bathroom stall overhearing a driller ..... you know the stories... My $2.07 went to $1.56 in a few weeks. I wanted to sell but could not bring myself to admit I was wrong in trusting this advice from a few close co-workers. My gut said sell now! -My ego said wait until it gets back to $2.07 as you have not lost anything until you sell. A month later it hit $1. By then I had heard some sage advice "Many people believe that you cannot lose on a share until you sell. That is true for taxes and capital gains only. Your loss is exactly reflected by what the bid price is today. You may believe 100% that it is going to go up, but the amount that the stock has gone down is already lost. To believe otherwise is to be in denial".

I sold that stock at $1 after coming to the realization that the money was gone. The shares were still there sure but the market was the one that dictated what they were worth. The market on that day deemed them to be worth $1. Not .99 cents or $1.01 but $1.

The week after I sold those shares at $1 the stock rose to $1.30. Happy times. Now my ego was pummelling my rationale side. Like the angel and devil on Fred Flintstone's shoulders. The only thing that kept me sane was by then I had left no stone left unturned looking at the company that came to me as a "hot tip". I looked at the internal and external risks. Risks with winter roads and supplies and the economy. Risks with financing and loans and of course the risk that a whole group of people called investment houses or hedge funds make just as much money when a company goes bankrupt as it does when it stays in business.

Learning #2: This isn't the old days when you buy IBM and wait 20 years and the stock is worth 100 times what you paid for it. The market does not always reward strong company. Markets drama like volume, news, fears, and innuendos can take an otherwise strongs company and drive it to the brink of liquidity based bankrupty. Why did the US bail out GM? Because people started to walk and decided they did not need cars? It was because the hedge funds drove the entire market into the ground and pulled the rug out from underneath the entire structure they rely on to make these dirty profits. GM could not score money to finance cars as everybody packed up their purses and went home after the devestation was over. For the most part, those purses are still at home (or in Gold).

Back to my first stock:

Within six months the stock I had sold at $1 dropped to a penny and the company folded. During that time I took the 45% I had left and invested in a very little gold mining company that a friend told me about. He explained all of the risk and upside and then I did the DD before jumping in. That company was Noront and at the time the market cap was $6 million dollars and the share price .18 cents. My friend owned 250,000 shares. His friend owned 1 million shares. His friend lived in Quebec and used to drive out to the Windfall Lake area to see what was going on. On night he noticed that the lights were on more than usual with a ton of activity happening throughout the evening. He knew something good was going to happen when people are working overtime on a spec drilling operation. Needless to say, Hole 100 news broke a few weeks later.

I did not see them much of my friend after the Windfall news so i do not know if they both held out through the ROF news the next summer. I just remember thanking him for leading me in the right direction after having taken a 55% beating only a few months earlier.

When I read the discussion between Jackie and Sum today, I believe they are both right. Sum made some excellent points about seeing your investment as it is today - not as it once was. About setting aside a portion as a long term hold and using some of it to move in and out of different stocks. In essence, reducing the risk of losing at the risk of not making more money should a stock take off. Jackie made some excellent points on keeping your eyes focussed on the value that exists in the future when viewed in light of the low share prices.

My shareholdings with Noront are very fluid. I prefer to hold Noront when there are no other high potential less risky opportunities around. Noront is a risky investment for a lot of reasons, none of which have to do with what is in the ground. At .50 I believe Noront is a no brainer for a good 50 to 100% return within six months, each and every time. Time and time again this has been proven. At $1 Noront has only had two runs in the past, one to $7+ and the other to 3+. Both times the stock retreated back to .50 cents.

I have been fortunate to sell on the way down. Sometimes I only lose a little bit of money. Last January I bought in at $1.15 or something a week later at $1.12. I did not like where things were going with the First Nations discussions (with Cliffs) which of course brings risk to the whole area. I took the money and invested in some other stocks that didn't do anything or any significance, but they stayed even for the better part of the year. When my favorites hit bottom, it is time to start paying closer attention.

When I look back on the last two weeks, I believe that it was volume and volume alone that drove the price to .92 cents. I could be wrong but I would rather be wrong and have what I have then right and lose more of what I still have. I bought on the way up as I prefer to average up when a stock is taking off than average down when a stock is losing. When averaging up I set a cutoff point should a turnaround take place and the stock start to decline. My cutoff point was .76 cents. I never play the game of I should have or could have sold at this or that price and left with a profit. Never. The reason for this is that hindsight does not exist. It is an illusion that is related to insanity. It is like predicting the future backwards but tying your emotions to it which often times leads to regrets and the associated mental impacts.

Here is something I do each and everytime I look at a live stock ticker. It is something I taught myself a few years back when I was carrying the load of "I should have" or "if only."

When I look at the stock prices and my holdings, I stop and analyze my thoughts. I say to myself "at this exact moment in time, do I feel confident holding this stock with what I know right now". If the answer is "no" I sell some or all. If the answer is "yes" I may hold or choose to sell another stock and buy more of this particular one. I then take a mental photograph of that exact moment when I am looking at the screen making that decision. Why? For that picture contains what at that time I believed was the most rationale and sane decision I could have at that time based on all of the information I had available to me at the time. This information includes research, risk analysis, evaluation of volume trends, ... which at that exact time on that exact day led me to either buy, hold, or sell. The key is to capture the "at that time" decision and not forget it.

The benefit of this mental picture is that if the time comes when the stock goes up and I do not hold the stock, I never have a regret as to why I either sold or did not buy that stock during the last session, week, or month. When I review the picture I know I could not have made a different decision anyway on that day as I have a record of myself being totally totally at the time. How can someone regret being totally rationale. The outcome for the present day may not be what a person wanted, but when looked through the stored mental picture of the previous day or week's decision to buy, hold, or sell, one can focus on learning from the delta between the previous rationale decision and the current reality.

If I am proven wrong by selling a stock too early, at least I am rationally wrong and go back to the tape and review my exact thinking on that day. Did I miss some DD? How was my emotional level? My fear levels? Often times it is none of these and just bad luck. But the key is that I take a look at the game film and move on. Athletes do this every single day. They cannot go back and say what if and if only after a loss or an injury. Why do we as investors do it?

Here is an example of this at work. It is based on the last two weeks with my return to owning Noront after a long layoff:

Day One: I see Noront climbing to .70 cents on high volume. Strange given that it has been trading between .40 and 60 cents the past five months. I buy based on everything I know about the company at that time. I take a mental picture while I am placing the order so that I can play the tape back later should the temptation to "would have should have could have" enter my mind.

The next day we are in the high .70s. Too early to sell based on volume and strength of the bids. Need more info to make a rationale decision here. DD the heck out of the entire area, look at other companies in the area. Check out three or four stock boards. In this case nobody has answers. Decide to hold and take a mental picture of this decision. Later on stock hits .92 and starts to retract. Make a rationale decision to hold in spite of the fact the that TAers out there are going to call a SELL CONFIRMED any minute. I know that news can trump techical analysis (TA) at anytime but more often than not TA wins more hands given that the swings and trends occur more often than news releases. I hold knowing that there is a chance TA will influence those who live and die by TA so their decisions will have been made and they may start to dump, creating in part a self fulfilling prophecy. Mental picture of me holding at this point. Next day stock moved to low .80s. Battle going on holding .80 cent support. Below this an my cutoff is approaching. Still no chatter to confirm massive volume of recent weeks. Boards are at a loss as to what is happening. Longs staying long as always. Are hands being shaken for a later build up? Will the stock continue to descend?. Does not matter. I decide to hold to see if a reversal will occur on demand caused by possible leaks. A confirmation one way or the other is needed. Mental picture taken. Next day my cutoff point (break even) point of .76 cents is reached. Around the same time another opportunity I have followed for three years is starting to come to life again. Time to move some money over to that one after a risk/benefit analysis concerning holding Noront long and waiting or risking missing the big show (a buy-out) and taking my chances in the Oil industry. Brent is very high. DD starts on other company. Decision made near end of day. Take a mental picture of me selling Noront and take a mental note of the reasons for this in case of later playback. Should Noront rapidly ascend to $1 or more I still have my money in another company which is going up. Mental picture captured.

Through all of this I protect myself from mental anguish and stress caused by playing the should have would have mental games. Each day I made a decision regardless of whether I bought, sold, or did nothing that day. Doing nothing is a decision that needs to be recorded as well. I have no regrets as I made the best decision I could for myself that day. I am not saying it is always the correct decision, but I do not regret making it as the tape when played back shows a decision that cannot be changed later. Sum said it best "we can only control what we can control" After my sell I continue to watch the stock, in some cases for years until I buy back in again. Should the stocks descend I consider myself lucky that I got out. No need to rewind the tape as nobody ever regrets selling before a drop. Should they rise there is always another day and another stock.

But less I digress...

Lesson 2) You can never beat the hedge funds but you can be your own hedge fund at often cheaper prices

There is only one way a retail investor can beat a hedge fund. Beat them at their own game. Sure they drive the prices down to make PPs better. Sure they get lots of shares at lower prices than what you may have originally paid. But I have rarely seen a stock go to higher share price levels in the weeks following a PP. Most of the time the stock drops by 30%. I believe the reason for this is that the hedge funds who subscribe to the PP short the stock right after the PP knowing they can either buy it back later at deflated prices once they demoralize the retails shareholders, or at worst by covering with the shares they receive after the 120 day hold period. To summarize, they buy shares at $1, sell them immediately for $1 which increases supply, the price drops which shakes out retail over the next few months as they grind the price down. They then accumulate with little to no risk as they receive the shares 120 days later. If they buy back to cover their shorts the price then starts to go up due to less supply and they sell their PP shares for a profit. They make money on the way up an on the way down.

I do not short stocks and never will. The reason is that while I am prepared to lose 100% of my investment, but I am not willing lose more than that. If I short a stock at $1 I can only make a 100% return on my money if the stock goes to 0 cents. The downside risk of that is that I can lose more than 100% of my money if the stock should go higher than double my original short purchase before I am able to cover my short.

If I buy the stock at $1 and it goes to $3, I have made a 200% profit with a downside risk of losing 100% of the $1.

Better to lose what you have than to lose more than what you have an owe somebody else who made money off of you.

All that being said, you can achieve the same result of shorting a stock without the downside risk. It is called selling. You sell some and buy back at a lower price. Should the stock go up instead of down, you have only lost on the paper profits. You still have the value of what you sold in cash or a different stock. Should the stock drop, you can buy in at the same price the hedge funds are accumulating at. They do not have a corner on the buy and sell market in the age of electronic self directed trading. We all have access to the buy/sell button in real time. That in itself levels the house advantage to our favor a little bit. (yes I know about Level 2 ... but in reality that is helpful for day traders as things are not always what they appear to be with the depth charts due to large lots being placed and pulled in mere moments in an effort to simulate supply and demand at different depths.)

By buying at accumulation prices, you often times get discounted prices for the ride back up. Prices much less than the funds bought at when they took out a private placement at a much higher price than current day trading price following the PP. Sometimes this is called "following the big money". Many like to get the same deals as the big money during the accumulation stage, but we need to remember that big money sells at the end of the day, week or quarter as they do not get their fat bonuses for holding everything long. They have quarter end targets to meet just like everybody else in life. Some call bad market days profit taking by the funds. There is much truth to this. If they sell, we have every right to as well. Selling is not admitting defeat. It is not saying your company is a bad investment. One might sell just because it reduces a risk to their personal portfolio for that day or week or month in light of all of the factors they are applying their rationale mind to.

So in summary, learn from losses as they are the best teachers. Take mental pictures of your daily decisions when it comes to the reasons you have sold, held, or bought that day. This will help keep you emotionally sane when investing. Finally, become your own hedge fund without taking on the risk of shorting. Selling is shorting in a sense without the risk. You can cover by buying later. If you sell and the stock takes off in the other direction, rewind the film, learn from it and don't dwell on the paper gain that was missed.

Anyone can predict the past with 100% accuracy. Not many people can analyze what they did in the past to help make their present and future decisions better ones. To be able to do that without carrying emotional and mental weight and regrets is one of the keys to success in the market.

The other of course is luck :)

M1.

money is lost. Each day you wake up you are betting