Was This the Best Stock Tip of 2008?

Please don't tell my wife, but I'm not always right.

I goofed pretty majorly back in July when I failed to predict the damage to Teck Cominco (NYSE: TCK  ) shares from a most untimely acquisition. I also learned the hard way not to underestimate Korean steelmaker POSCO (NYSE: PKX  ) . Thankfully, though, I've had my share of correct calls as well, but none more timely than my best stock tip in 2008.

As a long-term value investor, I generally pay little attention to the volatile peaks and valleys that seem to so entertain the investing masses. Since the equities markets in 2008 were characterized by bouts of forced liquidation and indiscriminate selling, valuations for many quality companies dove through bargain territory right into the realm of ridiculous.

Case in point: Trading below $3, Silver Wheaton (NYSE: SLW  ) shares valued the company's silver streams at an unbelievable $1 per ounce. I knew the valuation was irrational and therefore unsustainable, but through some combination of blind luck and blind faith, I also nailed the timing to a tee.

Silver Wheaton's shares hit their 52-week low of $2.51 on Nov. 25, the same day that article appeared. Since that time, those shares have more than doubled to trade near $5.50 as we head into the holidays. For the swing trader who may have locked in some profits last week, the move could have produced gains of 175% in just a few weeks. Some Fools got downright emotional. (You're welcome.) For those with a longer-term focus, however, I believe that the 2008 low of $2.51 will stand as an all-time bottom.

Calling bottoms is inherently risky and often pointless, but I believe the widespread panic which painted that tape is unlikely to affect the precious metals sector in the same way again. To date, U.S. Treasuries have been among the most notable assets to which investors have fled, but I see gold and silver reasserting their roles as safe haven assets should any further panic selling grip the equities markets in 2009 and beyond.

My best stock for 2009, Agnico-Eagle Mines (NYSE: AEM  ) , also enjoyed a quick double from its late-October low, while fellow gold producers Yamana Gold (NYSE: AUY  ) and Kinross Gold (NYSE: KGC  ) have moved sharply higher as well. Pan American Silver (Nasdaq: PAAS  ) , meanwhile, has bounced only about 60%. (Only!)

Once more for the record, I believe these quality miners have seen their darkest hour. We'll just have to wait and see if I can claim the title of "Seer of Metal" or not.

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Fool contributor Christopher Barker promises to keep in interesting by being wrong a couple of times in 2009. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns shares of Agnico-Eagle Mines, Kinross Gold, Pan American Silver, Silver Wheaton, Teck Cominco, and Yamana Gold. POSCO is an Income Investor choice. The Motley Fool has a sterling disclosure policy.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 24, 2008, at 10:17 AM, zeeman2008 wrote:

    so you got one right,what does that mean.whats your track record for 2008?

  • Report this Comment On December 24, 2008, at 1:46 PM, Jobbik wrote:

    Even still, while a great trade there have been other incredible run ups. There have been some great day-trade opportunities with the likes of GM, FNM and most notably in recent days, PLD (Prologis)

    A few weeks ago you could have purchased Prologis at just over $2/share. They are as of today trading at over $13/share (today ending about 30% up).

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