Don't Get Trapped by Tunnel Vision

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When my children were younger, I used to take them on horseback trips through the wilderness, such as the Deep Lake area of Northern California. Deep Lake is very small, but very deep and secluded, and swimming in it are some of the largest, most stubborn trout I've ever seen. They'd sun themselves in the shallows, and for hours on end we'd try to tempt them with all kinds of bait, to no avail. All we could do was watch them in dismay until we eventually lost patience, went back to camp, ate our dehydrated beef stew and talked about the fish that got away.

Last week, I discussed Royal Gold (RGLD Quote), another fish that got away.

I shorted this stock in late January as it made a double top, and I was then stopped out in early February as it continued higher. I felt it was a good entry and a good stop, but what bothers me about the trade was that I took it off my screen after the stop and failed to follow through on the idea. I lost patience. When a Barron's article came out last week, the stock got dragged down from $19.45 to $12.70. Yes, it was aggravating, but it was also a good reminder about patience, something we sorely need in this market lately.

Lamenting Lost Opportunity Here's a year-to-date look at Royal Gold

However, I also mentioned that I was looking for opportunity in the counter-reaction off the bottom. Sudden, dramatic price changes attract attention. They are compelling and often invite counter-reaction, so I felt that a new opportunity was presenting itself.