[starsky]

Hi, At the beginning of the summer I invested 35 grand in a bond that has energy and raw material stocks. Since then it's gone down like everything else, and I've lost 7 grand so far.

My question is, should I cut my losses and sell, or wait a while till it recovers? Because this month it has started to rise again.

[pup55]

Hi, Starsky:
How soon do you need the money? Your decision should be based on your investment horizon.

[joeltrout]

I assume you are properly diversified and the $35k only represents about 5% of your total portfolio.

So the remaining $665,000.00 should be diversified therefore some of your investments will be up and some will be down.

If I were you I would hold onto the investment for the long-term but don't take anyone's advice. You make the decision.

joeltrout

[Carlhole]

Hi, At the beginning of the summer I invested 35 grand in a bond that has energy and raw material stocks. Since then it's gone down like everything else, and I've lost 7 grand so far. My question is, should I cut my losses and sell, or wait a while till it recovers? Because this month it has started to rise again.

You must mean a "stock" a "fund" or an "ETF" -- not a "bond", right?
A bond is the right to receive a set stream of regular debt repayments. It's an IOU. You receive interest and principle. A bond would only decrease dramatically in value like that if something horrendous - like a total default occurred followed by liquidation proceedings and dispursments.

If you mean a stock or an ETF, which one was it?
DISCLOSURE: I am a former Financial Consultant with Merrill Lynch. I only screwed my clients when they deserved it.

[Cochise]

Serious question Carl: how did you decide that a client deserved to be screwed?

[Carlhole]

Serious question Carl: how did you decide that a client deserved to be screwed?

I was just joking, dude -- because stockbrokers have such a slimey reputation.

I worked in an office which was mostly catering to elderly, wealthy clients. So I was mostly selling things like municipal bonds, mutual funds for income, blue chip stocks and stuff like that. We did financial planning too.

Since the assets turn-over was so low for these kinds of clients, a broker would need (at that time) about $30 million under management just to make a measley $30 - 40 thousand per year. So the successful brokers in that office had upwards of $200 million under management.

I had a few clients that wanted aggressive growth stocks and these were my favorites. None of my clients had a bad experience because it was the 1990's and it was easy to do well in the stock market. Bonds weren't as good as the 80's but they weren't terribly bad either.

[eastbay]

Hang on to it. It'll go back up for all the reasons you'll know after you read more about peak oil and energy right here.

Welcome aboard!

[drgoodword]

At the beginning of the summer I invested 35 grand in a bond that has energy and raw material stocks. Since then it's gone down like everything else, and I've lost 7 grand so far. My question is, should I cut my losses and sell, or wait a while till it recovers? Because this month it has started to rise again.

The exact nature of your investment is a little ambiguous. If you're somehow invested directly in commodities, then I'd hold. If you're invested in company shares, then I'd sell immediately. I'm in agreement with the ultra-bears who believe stock markets globally--including, of course, the U.S.--are on the verge of a historic crash. Even with commodities as a safe haven, resource stocks will collapse with the rest of the market, as they did in the early 30's.

Unless you're an investment wizard, the name of the game over the next ten years (at least), is wealth preservation, not growth.

[starsky]

Hi, At the beginning of the summer I invested 35 grand in a bond that has energy and raw material stocks. Since then it's gone down like everything else, and I've lost 7 grand so far. My question is, should I cut my losses and sell, or wait a while till it recovers? Because this month it has started to rise again.

You must mean a "stock" a "fund" or an "ETF" -- not a "bond", right?
A bond is the right to receive a set stream of regular debt repayments. It's an IOU. You receive interest and principle. A bond would only decrease dramatically in value like that if something horrendous - like a total default occurred followed by liquidation proceedings and dispursments.

If you mean a stock or an ETF, which one was it?
DISCLOSURE: I am a former Financial Consultant with Merrill Lynch. I only screwed my clients when they deserved it.

Yes sorry, english is not my primary language. It's a fund that invests in company shares, more specifically companies that are into energy and commodities.

I don't really need the money at the moment, but when I put the money in I had imagined it to be in there for a few years. But now everything seems a bit timid so I'm thinking about pulling the investment if I were to need the money at some point in the near future. The investment is about 15% of my money.

[3aidlillahi]

Yes sorry, english is not my primary language. It's a fund that invests in company shares, more specifically companies that are into energy and commodities.

Well, that would explain the drop. Oil's down 25% from the high of the summer (when you bought in), gold is down 20% and silver is down 33%. You're lucky to be only out 7%.

I don't have much experience in this area, but take two things into consideration:
1) These 20-30% drops in commodities are likely corrections. Most people here are expecting them to come back up, at least partially. Winter is going to be tough for 2/3 of the US, which means heating oil will skyrocket, thus oil will skyrocket. Most think that gold and silver are oversold for various reasons. These will likely come back up a good bit, if not break old records.

2) Look at the companies profiles. Can you afford to keep these specific companies or is it better to walk away? If you're expecting to hold for several years and it turns out that you have XOM or other majors, you might want to rethink your situation. These majors are unlikely to replace their current production, which means their stocks will fall over coming years even in the event of high(er) oil prices (of course, a major spike in oil could reverse that).

From what others (SPG, etc.) have suggested, it's probably better to go with mid-majors who have good reserve ratios and potential, as well as oil rig producers (currently our fleet is older than McCain) and maybe service companies.

Diclainer: I was never a Financial Consultant with any firm.

[starsky]

Yeah I read the fund profile, and it is kind of diversified. However the largest investments are in shares from ExxonMobil (5,68%), Rio Tinto (5,28%) and BHP Billiton (5,06%).

50,55% of the funds total investments are in companies that are into industry goods, 47,66% in energy companies and 1,27% in service companies.

Here are the details, however it's all in Swedish, but I think you guys are smart enough to get the essential info out of it.