After a rather lengthy correction from the ICL and a couple of false starts, gold and the miners are marching their way back up. It’s interesting how bull market volatility can rattle investors. But those who stay on, make the money.
Category Archives: Investing
Heisenberg principle for luck
Luck is something that gets categorized as “good” or “bad”. We all want “good” luck and “bad” luck is to be avoided.
The reality is, we don’t even know if we have good or bad luck at the time we receive this luck. What seems to be the greatest luck in the moment, can turn out as terrible after. What appears to be bad luck turns out to be a blessing. Hindsight is 20-20.
Thus the “heisenberg uncertainty principle”, for luck. The more known the time we receive luck, the less likely we know its true consequence.
Make the pain go away!
As I’m typing, the gold market is in a selloff and breached the 200ma. It hurts.
All is not lost though. Below is a 1 month comparison of GLD vs GDX (as of 12/20/2012). During that time, GLD (in red) went down 4.67% and the GDX (in blue) 4.83%. If the miners are supposed to be leverage over the metal, doesn’t this mean that the miners are outperforming?
True change doesn’t happen noticeably, usually you have to dig deeper.
Stay thirsty my friends!
The climb to 1900
1900 is the price of gold that I’m looking to relieve my positions. It’s been a ride and a half so far there, as the expectation is to go towards 1900, not away. What has not gone well, is the recent spill in the dollar and negative response from gold.
Currently, gold is at 1675, about 13% away from 1900. Given gold’s volatility, it really isn’t far away, but it seems like it. The miners do a better job providing that sentiment.
Falling 10 dollars or more should be expected behavior, a day in the park. 40-60 is a more generous drop. A rise in the opposite direction, will be just as normal.
Don’t wish it were easier, wish you were better.
Value
Value takes on many forms, because value is manufactured at an individual level. Creating value can be done many ways, but the end result is the perception of feeling wealthier or relief from burden. This makes value mostly irrational.
Amazingly enough, the vast majority of value is manifested with rational behavior. From there, how high value can go is really in the eyes of beholders. The more people searching means more eyes are involved, making sought after value skyrocket.
Value being equated with wealth is a common mistake. Wealth has the ability to be more permanent than value. What wealth isn’t is but value is, is the transport of wealth. Wealth has no real means to go from one place to another. Only value is that vehicle that moves wealth.
The story a successful investment carries starts with value being small and virtually nonexistent. Over time and tribulation, should value grow and show how much it has moved over time. At some point, value will mature and not move so much, this is where the story should end.
Google “investing” will never give you the direct answer.
Today, when someone wants an answer, google is a viable way. It’s practically instant information. Amazing technology.
However, some things are meant to remain a mystery, “un-googleable”. Investing is one of them.
Type in “investing” and you get a litter of information about how to start from mainstream sources. Looking further, articles that “show” you how to invest, is really as easy as opening a stock account and shoving money in. Bam! Good to go.
Getting started really is that easy. Google says so.
Investing consistently is frighteningly difficult. Google doesn’t say so, or at least not so obviously. Let’s make it less so.
- Investing is inconvenient. There is no shortcut. It’s the long way or the wrong way.
- Investing is disappointing. Because it requires being early.
- All successful investors get hurt and fail, because failing is one of the rare circumstances getting better is tangibly noticeable. Losing is part of the path of winning.
- Investing is about being different with a purpose, in the face of convention and tradition. When everyone is thinking the same thing, nobody is thinking.
If Google manages to link investing to what was written above, the ungoogleable is now googleable.
If gold acts crazy, look at the miners
At this juncture, if you are investing in gold, expect ups and downs. The response needed to handle volatility of this type likens women and their emotions. Simply expect it.
And if gold is crazy, the miners make gold look like a day in the park. The lowers are lower, but the highs are higher.
Harder, Better, Stronger, Faster.
With the Feds now adding another 45 billion a month of fiat money as of yesterday, selling gold at this point is not the correct move.
Early expectations
Writing about being early pays are observations and results that consistently occur. What wasn’t described is what you must provide or experience for being early.
- Disappointment. Yes, be ready for this to happen. Everything is empty, quiet, and not happening. The hype isn’t living to expectations and disappointment set in. Once immersed, this is the moment to recognize it and provide some….
- Patience. Provide some this powerful stuff and rewards tend to come. Even so, waiting for the reward to come is a rather sub-optimal strategy, which leads to…
- Doing the work. Is it really worth to get caught up in disappointment, waiting for it to go away? Probably not. Work on a project, hustle for some bucks, connect with people, break routines. Not surprisingly, this is the hardest piece to overcoming early’s expectations. Practice working on you while being patient improves odds of overcoming early disappointments and reaching rewards that you want.
It’s not a surprise that negative emotions are associated with being early, further uncovering of why most do not like the concept of early. Early lets you set the stage for positive emotions when the right work is applied.
What do you expect when you’re early?
Getting in early usually pays back.
“The early bird gets the worm” has so many different meanings, pertaining to investing and life. Other forms of this such as “If you snooze, you lose” is quite popular.
While scientifically measured sentiment towards earliness is not readily available as I write, it’s clear that actually being early appears mostly undesirable to the masses. Upon second look, it’s clearly the better way to be.
Count the ways:
- Early is when value’s potential is the greatest. There is so much available to uncover. New relationships, new ideas, true abundance, anything goes. All are amazing concepts.
- Early is the best time to establish yourself. Anyone with some energy and some kind of discipline will make this happen. Claim your stake, make it yours and continuously own it!
- When the wave up approaches, being early is the time to catch it. While the risk the wave being delayed or not coming at all is something that can happen, it’s better than missing it all and coming late.
So why wouldn’t you aim to be early? I guess that will have to written another time.
Bubble, bubblicious
In my time that I’ve paid attention to economics, I’ve lived through two well known bubbles – the US tech bubble and the US real estate bubble. Bubbles can also happen without the general public knowing. They happen more frequently that most believe.
Knowing where the true end to a bubble is always hindsight, as they last longer than you’ll ever expect but end faster than you expect. The harder the party the harder the hangover. Let’s say the US real estate bubble was the biggest party ever to date.
So what do we look for in mega-bubbles?
- Over enthusiastic public sentiment. Quotes like, “It always goes up”, “This is different”. Or sitting at a restaurant and hearing how much money was made with that thing everyone else is making money with. Investing is never different. There’s always a beginning and always an end.
- Media attention. The power of media attention is immense. And by immense, it means that it can irrationally blow up the value of anything. That saying “15 minutes of fame”, no wonder everyone seems to want it. It’s pay day. Reality shows are a sure sign that the pinnacle is near.
- Investors coming out of nowhere. During bubbles, everyone seems to be an “investor”. In my short life as an investor, it has been one of the most difficult worlds to grasp. It requires experiencing failure, the acceptance that nothing is a guarantee, and the courage to act upon opportunity that the very few partake in. Most are not willing to be in these kinds of position, so how can “investors” be everywhere?
- “Everything is great and can only get better”, quite possibly the most dangerous mental state ever. The only time improvement is achieved is if a bottom is hit, hopefully a rock bottom.
So, here’s to bubble parties. Everyone is invited.
The Brainyard 