Noront Resources

Hi all,

Like many on here, I cannot sleep.  It is only 1:00 PM here in Alberta so it is near my usual bedtime anyway.  Thought I would jot down some thoughts.

We have to face the facts that at some point, we will have a pull back in the share price before moving to the next level.  It is inevitable.  It may not be tomorrow or next week, but it will happen.

I cannot predict when it will happen, but it will likely be during a lull in demand, usually inbetween news releases.  The demand is strong enough recently that there has been no opportunity for a lull.  But at some point inbetween news releases, a lull will happen.  The price at the point of the pullback is irrelevant.  All the longs are in a good place as of today, and the future looks very promising.  There is not a single long who could have got in for more than 1.07 from last year to last week, so we are all doing well.

Many of us are adjusting to what I will call the multi-bagger illness.  This is where a stock jumps in multiples so fast that your emotions and brains do not have enough time to catch up.  My wife today had what I could only describe as an anxiety attack thinking about the amount of money in our portfolio and how fast the stock was climbing on each click of the screen (she is really into this).  Thoughts of "can it go any higher" and "what if it falls and we haven't sold" all filled her brain.  It's all just part of the illness I say (sorry sweetie ;)

I am trying to prepare her for the next illness, and that is the gutwrench that comes with seeing a pullback.  It is one thing to see the portfolio value jump on each refresh.  It is another to see a new high start to drop below the close of the previous day.

Institutional investors know that the retailers are prone to the pullback illness.  The stress, the fear, the lost BMW,.... It takes a strong person to hold strong in the face of panic.  When the brokers who want the stock for their clients as cheap as possible sense a lull and smell the first hint of fear, they will short this puppy to no end to drive down the price.  They may even naked short it if they have no morals.  This will trigger the stop losses that have likely been set by many and the self fulfilling downward spiral will begin.

Some of the more experienced investors have mentioned that many great success stories saw pullbacks before the stock really took off.  ARU is a normal example used as it was recent as of the summer of 2006.  There is another company that I would like everyone to take the time to learn from.

Please note that this company is being used for an example only.  I do not know the first thing about the company and am not promoting it.  I really do not care about it and will not invest in it given its price.  But it does serve a similar as a good example for us given its recent SP history and its SP similarity to NOT.

For this exercise I would like to use Stockhouse's historical charts as they go back many months on a day to day basis.

The company called Timminco Ltd (TIM on the TSX) has 92 M shares outstanding.  Similar to NOT.  They also had a share price in the .40s to .70's in the months leading up to their spike.

On April 2, 2007, their SP was $.75 with low volume traded.  The next day, the price was $1.45 with 3 M shares traded.  The following day $1.90 on 4.4 M and $2.94 with over 7M shares trading the day after that.  Not a bad jump in three days.  I do not know what caused the jump nor do I care.

What I do care about is the progression of the share price from that moment till today.   The stock is at $11.65 today.  A look at the history day by day will show you that this stock moved through each dollar level without too many swings downward.  A fairly smooth graph.  Some days were better than the next and some days the stock would fall up to .50 cents.  What is interesting is that this stock held up well even during the first two weeks of August, during the market crash.  From April to August the stock also traded at levels between 250K and 4M shares daily.  Nothing abnormal volume wise.

If you look at August 7 to 10, you will see that volume picked up and the stock jumped from $7.04 to $7.80 (high of $8.00 during those days).  After the stock closed at $7.80 on August 10th, it opened at $7.90 the next day and closed at $7.44.  The following day saw a close of $6.60.  The day after that a close of $5.82.  On August 16 the stock closed at $5.08 although it had dropped to as low as $4.10 that same day.  That is a difference of $3.70 cents from just 5 days earlier.  The volume during those five days was an average 1-2 million shares, so their was no mass hysteria.

The five days above is what I would call a pullback, but one triggered by fear.  These investors had seen their .40 - .70 cent stock go to as high as $8.00 and then had it close at $5.08 just a week later.  This must have been quite the psychological blow.   Close to 10M shares were sold during that time.  Those selling still did well assuming they bought in low.  But could they have done better??

The past is 20-20 so we can see that the next week the rebound started.  Again, I know nothing about this company, but I assume those who knew what made the company special were buying up shares at higher prices again.  Over the next 16 days the stock then  doubled and closed today at $11.65 after hitting a high of $12.

I bring this example to our attention as it shows that a company can go from .60 to $12 and hold its own along the way, even with a pullback.  They had one significant pullback during the five months since the initial jump.  That caused many a retail investor to give up their shares at a 50 - 66% discount after holding for the previous 4 months.

The morale of the story:

Pullbacks are a normal part of investing.  If a company is a pure pump and dump, the pullbacks will likely be permanent.  If the company has the "real goods", the pullbacks will shake out those with the pullback illness.  Like many have said on the different boards, they had often times owned a great stock only to have sold it too soon.

I encourage many of you to consider how you will react during the pullback that will happen at some point.  Regardless of whether it is tomorrow or when the stock is at $20, we will feel the pain of seeing our portfolio values drop.  It is at these times when information and support will be needed.  We know we have two excellent properties and a lot of gold at Windfall to check out in the next six months.  To avoid the illness we will have to stick it out together.

I appreciate all of you on here that have been with me since my beginning last November and who have joined the band of merry Notters along the way.  We all seen an excellent increase today.  I look forward to seeing much more in the future as we get accurate resource estimates.

M1.

P.S. I want to send a special thanks to my friend who introduced me to NOT (it is not ShareWizard) last early November.  He has held 100K shares of NOT since last October and cashed out when it hit $1.65.  His average was .145.  I have not been in contact with him since last April but received an email from him today.   The guy is in his early 20s and that is a lot of cash for a young buck, so I hope he holds his head high.  I know he will find another high potential 10x stock soon that we can ride together next year.  Well done man!