Another day, another fall on Wall Street, with the Dow dropping 68 precious points, and taking the ASX and some of my stocks down with it too.
Geez, I can't seem to get a break at the moment. Even my US-quoted 3D printing "wonder stock" took a hit, falling 2%. Just when I thought a 10-bagger (1000%) was in sight, I have to be content with sitting on my 533% gain, at least for the moment.
Motley Fool Share Advisor stock picker Scott Phillips advises me news program "60 Minutes" is this weekend running a feature on 3D printing. More on that a little further down.
You may have spotted Scott talking to Ticky Fullerton about Qantas (ASX: QAN) on the ABC's The Businesslast night.
Motley Fool Share Advisor stock picker Scott Phillips chats to Ticky Fullerton on the ABC's The Business.
Scott's let his views on Qantas be well known. In an article over 12 months ago, he said "Not much has to go wrong for Qantas' profit to turn to a loss."
Qantas turns to junk
Today, Qantas shares went into a trading halt in advance of their debt being downgraded to junk status. The nightmare continues, for the company, its employees and its shareholders. The market let Qantas off pretty lightly, only marking the shares down 3% to $1.04 on the resumption of trading. Still, shares in the plummeting kangaroo are down 15% this week.
Scott has more on Qantas below. The moral of the story is clear. Don't lose money. Focus first on the downside before even thinking about the upside potential. If it looks too good to be true, it usually is.
You get the picture.
Gold stocks — time to buy? Surely not!
Against that backdrop, can you imagine my surprise when yesterday Scott said gold stocks were looking a little interesting?
You could have knocked me over with a Mitchell Johnson bouncer.
The words "gold stocks" and "Scott Phillips" have previously been mutually exclusive. Like me, and a good number of our Motley Fool colleagues, he's long been a bear on the gold price.
Put simply, we followed our noses. If it looked like a bubble, smelt like a bubble and walked like a bubble, there was a fairly good chance it was a bubble.
In this game, you quickly learn a couple of things about bubbles…
1) Often, bubbles inflate far bigger and for far longer than you'd ever imagined possible.
2) Picking the top of any bubble is virtually impossible.
On point two, our Motley Fool colleague Morgan Housel got pretty damned close. In an article in The Sydney Morning Herald dated September 6th 2011, he urged readers to "Dump your gold in favour of shares."
Since then, it has been all down for gold, and gold stocks. The scorecard since that article was published tells you all you need to know…
S&P/ASX 200 — Up 24%
Gold — Down 35%
We trust you've been in stocks during this great bull run.
We also hope you avoided gold stocks.
As gold investors start capitulating, the worm could be turning…
But maybe, just maybe, the worm is turning.
The selling in gold stocks has become just a little indiscriminate. Investors are capitulating, the pain too much to bear. They're selling at any price, just to end the nightmare.
That sort of investor behaviour gets Scott and myself interested. We may not be at the bottom yet, but we're certainly a lot closer than we were just a few short weeks ago.
Take a look at some of the pain that's been handed out to these selected gold stocks so far in 2013…
Silver Lake Resources (ASX: SLR) — down 89%
Kingsgate Consolidated (ASX: KCN) — down 80%
Kingsrose Mining (ASX: KRM) — down 54%
Northern Star Resources (ASX: NST) — down 49%
Beadell Resources (ASX: BDR) — down 31%
Scott named those five gold stocks as companies he's going to be taking a closer look at. They are definitely not recommendations, so don't rush out and buy them.
If gold gets to US$1,000 an ounce, back up the truck…
In any case, Scott's likely to wait for a few gold mines to be mothballed before officially recommending any gold stock. But with the gold price at US$1,225 an ounce, and Bell Potter's Charlie Aitken reckoning the price could be headed to US$1,000 an ounce, total capitulation could give even a devout gold bear like Scott the opportunity to snap up some total bargains.
A licence to 3D print money?
On the opposite end of the spectrum are 3D printing stocks. My "wonder stock" is very richly valued. I can easily imagine a scenario where it pulls back 50% or more from here. On the upside, it could be headed into orbit… if this is just the start of the 3D printing phenomenon.
All of which has me thinking about the upcoming "60 Minutes" feature on 3D printing.
Are they late to the party, and this is a sell signal? Or is it a signal the growth and mainstream adoption is accelerating?
With stocks like this, you pay your money and you take your chances. It's the little "splash" up the top of ourMotley Fool Share Advisor portfolio allocation pyramid.
Whatever angle "60 Minutes" come at it from (given their track record, it's unlikely to be a "feel-good" story) I'm hanging on for the ride. It's not often you get the chance of a 10-bagger, and I'm not going to die wondering.
3D printing — an American phenomenon with an Aussie solution
We get at least a few emails each week asking about 3D printing stocks, and in particular whether any are quoted on the ASX.
The answer is no. They are US-quoted. But don't let that put you off. Investing in US-quoted stocks is easy. Commsec customers (no affiliation) can click here to bring up an application form. I use OptionsXpress (no affiliation), and you can click here to access their account opening application.
Huge growth stock winners
Admittedly the numbers are boosted by Netflix (Nasdaq: NFLX), up a cool 634% since we first tipped it in July last year. But we're also sitting on huge gains in Amazon.com (Nasdaq: AMZN) +158%, Priceline.com(Nasdaq: PCLN) +143% and Starbucks (Nasdaq: SBUX) +98%, all growth stocks for that middle growth part of your portfolio pyramid.
As for the core of your portfolio, I suspect many of you already own bank stocks. Although my family portfolio still holds three out of the four big banks, I'm not overly enthusiastic about the prospects of capital growth from here. The fully franked dividends are nice, especially in a SMSF, but I'm after capital growth too.
As ever, I wish you happy and profitable investing.
