Tuesday, 31 May 2011
Capitulation is the point at which a bear market has a massive sell-off - at that point, with no more sellers left, the buyers take over and an upward trend resumes. However, this is only after heavy losses as been sustained.
Sadly, after 3 years of fantastic returns, the curse has struck my trading portfolio this year - with a nice dose of hubris too. I heavily invested in Xcite energy after the de-risking of a successful drill, only to see the market hugely mark down its potential - from 360 down to 167 - over 50%. A big reaction, too much, but AIM has it problems at the moment with liquidity. EMED too has fallen over 50% from year highs as news flow has been too slow for the market to accept there is real progress. CAZA's failure with a big exploratory drill has seen it 66% off its year highs. Even GKP, which has put out strings of good news, is some 25% lower that its high.
Overall 33% down of the year thus far, at the depths of last year, when my portfolio ended 115% up again, the loss was only 20% - this year I will be glad to get into profit at all. it is quite possible, with EMED likely to double or more and a recovery of some sort in XEL likely to see me near break-even. In reality, I am 50% down from year highs, which is considerably more in cash terms than I earn in my day job - a little sobering to say the least. (Lesson [painfully] Learnt - take profits and de-risk ahead of key news statements on event driven stocks)
Coming up later in the year, a possible GKP takeover after their oil contract row is settled and a make of break drill for XTR in the North Sea.