Originally published by CMC Markets
Almost every investor has heard the old markets say; "Buy straw hats in the winter". Like many principles of successful investing, it is easy to say and much more difficult to do.
The best time to buy a stock or a market is when it is at its lows. The difficulty is that the low points occur when the fear is highest. As human beings, our instincts must run with the pack, not against it. Fear of financial loss and shyness are key factors that prevent investors from trading at the potentially most lucrative times.
Investors can help themselves to buy in different ways at the best of times. One is to have a waiting list with very desirable shares in anticipation of a price drop. Alumina (AX 🙂 is a stock on my waiting list and has suffered a significant decline as prices fell compared to a peak earlier this year. Thing thing.
The production of aluminum is a multi-stage process. Bauxite is mined, refined to alumina and then melted in aluminum. AWC is involved in every step through its 40% interest in a joint venture with Alcoa (NYSE) in the US. Aluminum is an important industrial metal, but the very energy-intensive production process meant that the industry was shunned as part of the shift away from fossil fuels. In my opinion, the world is under invested.
AWC therefore looks good at the current share prices. Although wary of falling, if AWC only corresponds to the last two dividends in the coming year, it will generate around 15% (including postage). Even a halving of dividends still results in a return that is better than 7%. The graph shows a support level of $ 2.17, just below the current prices. The recent negative trend in base metals and concerns about global growth are generally the fear factors that weigh on the price. Despite the risk of foolish watching, it is in my opinion time to go to the record in AWC.
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