Bad Lux

Feb 10th, 2010 – Comment

A stock trading in a high risk environment that is also going down with little in the news stream to drive buying is not a great position for your money.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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lux

 

Hi,
Could you , please, tell me something positive (if there is something positive) about Lux Energy LUXE-OB. I bought it just before they splitthe stock and it has been slipping ever since.

Thanks,
Jana

 

Hi Jana,

Thanks for the assignment. Lux Energy Corp ( LUXE NASDAQ BB) trades on an exchange that by my rule of thumb has lower listing requirements and therefore has to be viewed as a higher risk environment. Senior exchanges such as the TSX and the New York Stock Exchange and Nasdaq set capital requirements and reporting obligations that reduce but don’t eliminate some of the risks associated with equity investing. As a general rule I  suggest that investors put the caution flag up when looking at investments trading in a higher risk environment.

 

LUXE

The best time to buy a stock is when its going up and in the case of LUXE at least at this point in time that’s not the case. The chart shows a waterfall decline which will take a lot of great news to reverse.

The company is participating in some projects in Alberta. On January 14, 2010 the company reported that they were increasing their interest in a project located in West Central Alberta. There was little sustained uptrend on the news.

 

LUXE2

The six month chart is no oil painting either. None of the indicators that I typically use show any indication of a reversal of the downtrend that LUXE is struggling with.

 

A stock trading in a high risk environment that is also going down with little in the news stream to drive buying is not a great position for your money.

 

I would say that you need to review your decision making process so that you reduce the risk you are taking and increase the opportunity to profit.

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