JPMorgan Natural Resources -48% down but still hanging on

JohnRo

masonic wrote: »

Surely you do not mean to say that this fund will never recover to its previous high? Unless the fund closes, there is opportunity in the future for a full recovery of the capital value this fund has lost over the past few years.

I'd go as far as saying with proper rebalancing it's entirely reasonable to expect it to fully recover and then some. The question as always is how long that might take.

Thrugelmir

masonic wrote: »

Surely you do not mean to say that this fund will never recover to its previous high? Unless the fund closes, there is opportunity in the future for a full recovery of the capital value this fund has lost over the past few years.

Underlying investments change in value by the minute. A permanent loss means that the remaining investments would have to perform even better. Simply to restore parity. So one needs to evaluate the fund as at today looking forward. Rather than looking in the rear view mirror.

Linton

Thrugelmir wrote: »

Underlying investments change in value by the minute. A permanent loss means that the remaining investments would have to perform even better. Simply to restore parity. So one needs to evaluate the fund as at today looking forward. Rather than looking in the rear view mirror.

Agree with your final two sentances though they seem to be run counter to the previous two - parity with some previous value is rather backward looking.

The key question that needs to be answered is whether the fund invests in the right things to provide a reasonable opportunity for good long term returns given where it is now and where one thnk the world may be going. In general I am happy that it does, though the current 27% in gold and other precious metals/gems seems rather high. I hold a total of 5% split between the JPM and the Investec Nat Res funds.

masonic

Thrugelmir wrote: »

Underlying investments change in value by the minute. A permanent loss means that the remaining investments would have to perform even better. Simply to restore parity. So one needs to evaluate the fund as at today looking forward. Rather than looking in the rear view mirror.

Isn't that just the nature of the beast? It's a very volatile fund in an already high risk sector. As dunstonh said much earlier in the thread, it could halve or double in the space of 12 months. It is perhaps not surprising that a speculative investment such as this might invest in companies that are at risk or either going bust or multi-bagging. The few that are able to achieve the latter may ultimately compensate for the former. Or perhaps they won't. I don't see that fact those constituents have gone bust as being particularly defining for the future of the fund - they certainly won't contribute to its performance from here.

I sold out of this fund from my S&S ISA when Ian Henderson left in late 2011, although I still hold a 5% allocation in my pension. In my ISA, I've been building a position in City Natural Resources, which is down nearly 70% from its previous peak, although my average loss is about 20%. With a focus more on the smaller miners, it's even more prone to gut-wrenching volatility. I was expecting a rollercoaster ride and it only makes up a few percent of my well balanced portfolio.

gadgetmind

Such holdings should be part of a much larger balanced portfolio. So, ignore current level, rebalance, and get on with life.

Kendall80

Natural Resources makes up just 2.5% of my ISA portfolio. On balance I wish i'd allocated more to it instead of going for single equity AIM oilers. Live and learn.

BrockStoker

Please tell me if I'm missing something, but as far as I see it JPM NR could yet be in for further losses. OPEC is purposely keeping the price of oil down and therefore the pressure on it's competitors up, in order to drive them out of the market it seems to me. Once the competition has gone OPEC will have a stranglehold on the market, and I strongly suspect oil prices will hit the roof as OPEC reduces production.

From what I gather there are no plans from OPEC to curtail production, and with oil hovering at potentially $60/barrel for months (perhaps longer) it's hard to see how at least some of the smaller fishes industry (who don't have the cash reserves of the big fishes) will be able to avoid bankruptcy.

If it was me holding JPM NR I'd be seriously considering cutting my losses now, and perhaps buying back once there are further drops. I know it's a risky strategy, but it could potentially claw back a significant chunk of the losses.

masonic

BrockStoker wrote: »

If it was me holding JPM NR I'd be seriously considering cutting my losses now, and perhaps buying back once there are further drops. I know it's a risky strategy, but it could potentially claw back a significant chunk of the losses.

If your strategy is to trade in and out of funds/sectors based on your predictions about whether they will rise and fall in the short term, then you probably would have cut your losses long before now. The usual rule of thumb for traders is to exit their positions on a 10-15% loss, not wait until their investment has halved in value. They then have the impossible task of predicting when they should buy back in. Long term investors, in contrast, let asset allocation and rebalancing inform their decisions, only selling an investment if it no longer fits in with their objectives.

tejero23f

I notice JPM NR have dropped to almost their lowest ever price this morning, can it go any lower or is this the time as warren buffet said "Buy low Sell high" or words to that effect.

BrockStoker

I'd be very surprised if there wasn't more pain to come. I think much of the blame for the trend over the last few days is down to Greece though.