Time is running out for seasonal buying deals: Mickey Fulp
Mickey Fulp says the December downturn is seasonal and there should soon be a bounce.
"It happens every year. It happened 10 out of the last 11 years around December 15—plus or minus three days on either side.
"The Toronto index hits a yearly low if not a seasonal low. And I attribute that mainly to tax loss selling, but also disinterest in the market. Everybody is focused on the holiday and party season."
Fulp says that there is usually a considerable bounce from the end of the year and into January.
Fulp says the seasonal low is a good time to "bottom fish."
"I tend to put in stink bids in for companies that are under-valued and have been oversold right now with the idea that in the short term I can trade 'em for a profit in mid- to late January. Or if there is something I want to own I can average down.
"The key to success in this business—you need to be a contrarian, and you want to buy stocks when they are unknown, unloved and undervalued. I think that mid-December is always a good time of year to do that."
Fulp has four criteria for determining the right kind of company to buy: a tight share structure; management that has been in the game for a while and has a track record of success; money in the kitty or the ability to raise financing: and a good asset.
"Most importantly, you need a good project—the right country, the right commodity, and the right kind of deposit."
Fulp is interested in oil. Being a contrarian investor, Fulp says oil stocks are a buying opportunity.
"All the oil companies have been sold off. There are some really good ones out there."
The low oil prices will also be good for miners, which will lower the cost of production.
"It's going to take a little while before we see the ramifications of this."