I am sorry, silverton, but this strategy makes complete sense.
(In other words, I disagree with your assessment. And in contrast to some other posters here, I will tell you the reasons rather than just stating that I disagree. This is because a discussion is educational whereas a disagreement without discussion in a negative thing)
"If things start looking bad" is simply another way of stating "cut your losses" in the case of a losing investment or "take your profits and run" in the case of an already winning investment. It is exactly what stops one from being a "stopped clock, right twice a day" type of investor.
One who is on the lookout for both negative and positive changes in the fundamentals is a flexible investor, not the "stopped clock" kind.
Coupled with "let your winners run", this is the basis of a very tried and true investment philosophy.
I agree that it is not enough to sell when things look bad. However, it is important that one do so. The other ingredient is to identify when things are likely to improve. That is the time to buy. You know: "Buy low, sell high".
One of the fundamentals that would cause one to switch out of a commodity stock (rather commodity stocks in general) would be if the commodity price uptrend ran out of steam. It will someday. I am keeping an eye on conditions that would indicate that. At that time, I would switch to some other area of investing. I am not married to the idea that commodities will go up forever. I am well aware that there have to be reasons for them to go up.
However, the reasons for a top to the commodities uptrend do not seem to be anywhere close to being here yet.
After all, one of the most fundamental tenets of economics is the supply and demand equation. I see continued great global demand for commodities. Should that falter, then I would be looking to get out.
I do not need to "nail the top" of each of my investments. In fact, I deliberately do not even try.
If I can get out of a "turning around" investment before the vast majority (who seem to be a very slow bunch - the majority that is ), I will not be left "holding the bag".
If I lose a little off of the peak of a winning investment before I get out, I do not consider that to be "holding the bag".
As for "in a statistical sense": now you have really lost me. Yes, I know what statistics is, I studied it in university. What do you mean by the phrase here though? Statistics is a tool to allow one to understand some aspects of some group as a whole or some system. How does this apply to the idea of "investment strategy"?
You will have to clarify that phrase before I begin to understand what you are driving at. No offense, but it sounds like doublespeak to me in its current form.
