In the last couple of months a number of small mining stock have listed and performed exceptional well, or have they? The biggest one day gain was 320% being Wolf Minerals; we've also seen companies such as RMA Energy up 240% on the open, Mamba Minerals up 170%. In the last five years 551 new companies have been listed with 70% of them being classed as materials or energy stocks. Is a company really worth 320% more the day after listing?
For this to be true the brokers listing the stock would have had to undervalue the stock by this much. History tells us one thing, it always repeats. For those of you who can remember the 1987 crash we saw the same behavior by investors. For those a little younger, you would remember the "Tech Wreck" of 2000.
Greed can easily eat away your profits, now is the time to be careful and listen to your adviser. There are many deals out there at present, people throwing money at anything with the word "Uranium" in it and if the company is in Western Australia it seems to be worth a bit more.
Before investing in anything check with your adviser first, if you've already invested in a stock which more then doubled on open, sell and take your profits. These stocks are like hot potatoes, the last person holding it will get burnt.
Please contact us at ABN AMRO Morgan's Townsville on 07 4771 4577 for all your investing needs.