A time to average down

Well, as I’ve mentioned on here in the past I have a little Roth IRA that is treated like a project as I learn more about the stock market and investing. Only own shares in a couple of stocks, one being Hudbay Minerals Inc. (HBM), the other Potash (POT). Working with not much money over here so that’s where I started.

And for the last several weeks both have declined significantly, reducing my tiny portfolio to half its original value. Averaged down in the past and did so again today as both companies hit new lows. Hudbay most especially took a dive and was selling for around $2.61/share earlier today, approximately $6 less per share than when I originally bought in a year or more ago. But no major worries — while I’m not confident it will recover, I’m willing to wait and see. Not one to sell off because the market gets crazy for a minute, though I have been reading about how the entire mining sector is facing troubles. There are worries over China not importing as many metals as before and the price of commodities have been plummeting. But, what can ya do? Such is the nature of the stock market. Goes up, goes down. When it’s down is when you buy in and try to average down in preparation for the eventual upswing, assuming the company weathers the storm.

But I’m assuming it probably will. Hudbay is teamed up with other mining operations that appear to be holding their own. Lost its CEO in December and is having trouble getting the permit needed to begin mining in Arizona, so that’s got some folks panicked. Understandable, I guess. Either way, I knew when I began this project that it would be all about the long haul.

Potash I’m less concerned about. It will bounce back, and I averaged down on it today as well, the share price down to approximately $16 from about $27-28 when I originally bought in. It’s a necessary component to fertilizers, so it remains needed. Some predict that someday that company will become blue-chip. Either way, we wait and observe and hold.

My buddy brought up short-selling to me earlier today and sent over an article about how biotech companies are getting hosed by hedge funds making illegal moves. Hmm. I don’t know much about all of that, but perhaps someday I can get a better idea about it and how it’s allowed to continue without the FTC doing much to stop it. So much of this remains Greek to me. Steep learning curve. Not sure how much I even care to know, particularly when it comes to all the finance jargon.

Anyway, this is one hobby to help keep me occupied from time to time, though I tend to prefer the “set it and forget it” approach most months, checking in only occasionally since there’s no real point in watching paint dry. It is what it is, I suppose. Win some and lose some is how it will go. Not too keen on the market being turned into a casino, but others seem to like it this way and few are willing to demand better regulation and oversight, probably due to wrongly assuming that’s somehow anti-capitalist or whatever (or not trusting our corporate-lobbyist-betrothed government and its officials to carry out the job, which I get). So I just try to watch and learn and observe and see what becomes of it all.

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Update the next day: Perhaps we would have been better off never investing in Hudbay, and maybe there will come a time to sell off the shares if the price ebbs back up in coming weeks. I had my reservations about dealing with a mining company from the get-go, yet here we are, rolling the dice right along with so many others. Might wind up being a lesson on how a fool and her money end up parted. Time will tell.

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