Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Samsung Galaxy S20+ vs Galaxy S10+ Which One to Buy? - 26th Feb 20
Gold Is Taking on $1,700 amid Rising Coronavirus Fears - 26th Feb 20
Is This What Falling Through the Floor Looks Like in Stocks? - 26th Feb 20
Gold Minsky Moment Coming - 26th Feb 20
Why Every Student Should Study Economics - 26th Feb 20
Stock Market Correction Over? - 26th Feb 20
US Bond Market Yield Curve Patterns – What To Expect In 2020 - 25th Feb 20
Has Stock Market Waterfall Event Started Or A Buying Opportunity? - 25th Feb 20
Coronavirus IN Sheffield! Royal Hallamshire Hospital treating 2 infected Patients, UK - 25th Feb 20
Dow Short-term Trend Analysis - Coronavirus Trigger a Stocks Bear Market? - 24th Feb 20
Sustained Silver Rally Coming? - 24th Feb 20
Should Investors Worry about Repo Market and Buy Gold? - 24th Feb 20
Are FANG Technology Stocks Setting Up For A Market Crash? - 24th Feb 20
Gold Above $1,600 Amid FOMC Minutes and Coronavirus Impact - 24th Feb 20
CoronaVirus Pandemic Day 76 Trend Forecast Update - Infected 540k, Minus China 1715, Deaths 4920 - 23rd Feb 20 -
Ways to Find Startup Capital - 23rd Feb 20
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Silver Update, Investors Instant Gratification Or Complete Apathy?

Commodities / Gold and Silver 2010 Jan 28, 2010 - 02:01 AM GMT

By: Investmentscore.com

Commodities

Best Financial Markets Analysis ArticleThe financial markets have millions of people competing for profitable trades but unfortunately their natural instinct gets in the way of the final goal.  Through evolution these investors are programmed to proceed (buy stocks) when they are feeling confident and run (sell) when they are scared.  The result of this “basic instinct” mentality is the classic, buy high and sell low, losing trade.


It is our opinion that the average investor falls into one of the following two categories.

A)  Apathetic, uninterested, do nothing, buy and hold indefinitely
B)  Very active, interested, over trade, instant gratification

Is one of these you?

Apathetic, uninterested, do nothing, buy and hold indefinitely.
This investor typically has no interest in the topic of investing yet naively believes that by following a few cookie cutter principles he will outperform the market and retire comfortably.  This investor tends not to question an advisors motive or consider potential conflicts of interests or even the source of their advice but generally “follows the crowd.”  Their long term investment decisions are often out dated and their portfolios can sometimes underperform for decades.  Interestingly enough, this investment mentality continues on and on without questioning assumptions.  On the contrary, this type of investor will defend failing strategies again and again while waiting to hopefully one day be proven correct.

Very active, interested, over trade, instant gratification.

This investor is generally interested in the financial markets and actively seeks out advice, guidance and strategies.  However, the fatal flaw of this investor is the expectation of unrealistic results the moment a position is taken.  The active trader tends to chase performance by buying the latest hot tip too late and selling it after it drops.  This investor will watch financial television programming and constantly jump from one idea to the next, expecting to be given very specific, “no risk” advice for instant, high profit returns.  These investors sometimes fall for the ‘big talking’, ‘big hype’ marketing guy who promises outrageous and unrealistic short term trading results.  Unfortunately the interested, active investor can even underperform the apathetic investor by constantly placing unprofitable bets and locking in losses again and again. 

So what is the secret to easy, profitable investing?  There is none.

Can an investor recognize their natural instincts, thereby improving their probability of success?  We think so.

We have written many articles about recognizing long term trends and rotating asset classes for superior returns.  To read these free articles we suggest you visit investmentscore.com.  In this article we are focusing on the current silver and gold bull market.

Let’s look at where the big money has been made in the current 2000 – 2010 precious metals bull market.




The above chart illustrates that there has only been about four periods of time in which adding to positions really made sense.  Obviously it makes sense to add to positions in the red sections prior to the next burst higher and then take profits as the price rises in the green sections.  Remarkably, the average investor wants to buy during the green portions of the chart as they continue to bet on the price going even higher.  As you would guess, this same investor typically ends up selling when the price drops and trades sideways in the red sections of the chart.  This is because the low price creates fear and the investor “runs” by selling positions.

The above chart illustrates that silver, like most markets, is trending sideways or thrashing up and down the majority of time.  Aside from periods of short lived bursts higher, the silver market experiences frightening drops or it simply trades sideways.


 
The above chart shows us that since 2002, the longest duration of a major up move in silver was about 11 months, the shortest duration was 7 months and the average advance lasted about 9 months.  This is important for two reasons. 

a)  Like the first chart, this tells us that the price of a rising market is not actually heading higher the majority of the time, but it is more typically dropping or trading sideways, scaring investors away.

b)  The duration of the current advance is about thirteen months and that is much longer than the past three advances.  Given this fact, we wonder why investors are desperate to find the next short term buying opportunity when this current advance has already lasted considerably longer than the rest.  If the average duration of the last three advances is around nine months and the current advance is already thirteen months long, history would suggest that even higher prices in the coming months is a risky bet.  Can silver and gold head higher in the short term?  Absolutely!  But when the price of silver has been advancing for thirteen months, longer in duration than any other point in the current bull market, does it make sense to buy more at this point? 


It is our opinion that the average “Buy and Hold” investor continues to lose money in the market as they hold onto their outdated broad market stocks.  Over the past ten years the place to invest has been hard assets and not the Dow Jones.  The last decade of poor investing has cost the “Buy and Hold” investor dearly. 

The “Active Trader” may have found commodities as they have come in and out of popularity over the past ten years.  However, the “Active Trader” is likely to buy in as the price rockets higher and then sell out at a loss a few months down the road, cursing the markets as they go.

Both of these flawed strategies and poor results must be very frustrating and yet many investors continue to hold to their convictions and do the same thing over and over again.

At investmentscore.com we do not have a magic bullet, fool proof strategy to investing.  However, we recognize the flaws many investors make and we have created proprietary indicators that help us increase our probability of success.  To sign up for our free newsletter and to learn more about our strategies as well as our paid service we encourage you to visit us at www.investmentscore.com.  Good luck.

By Michael Kilback
Investmentscore.com

Investmentscore.com is the home of the Investment Scoring & Timing Newsletter. Through our custom built, Scoring and Timing Charts , we offer a one of a kind perspective on the markets.

Our newsletter service was founded on revolutionary insight yet simple principles. Our contrarian views help us remain focused on locating undervalued assets based on major macro market moves. Instead of comparing a single market to a continuously moving currency, we directly compare multiple major markets to one another. We expect this direct market to market comparison will help us locate the beginning and end of major bull markets and thereby capitalize on the largest, most profitable trades. We pride ourselves on cutting through the "noise" of popular opinion, media hype, investing myths, standard over used analysis tools and other distractions and try to offer a unique, clear perspective for investing.

Disclaimer: No content provided as part of the Investment Score Inc. information constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. None of the information providers, including the staff of Investment Score Inc. or their affiliates will advise you personally concerning the nature, potential, value or suitability or any particular security, portfolio of securities, transaction, investment strategy or other matter.  Investment Score Inc. its officers, directors, employees, affiliates, suppliers, advertisers and agents may or may not own precious metals investments at any given time. To the extent any of the content published as part of the Investment Score Inc. information may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Investment Score Inc. does not claim any of the information provided is complete, absolute and/or exact.  Investment Score Inc. its officers, directors, employees, affiliates, suppliers, advertisers and agents are not qualified investment advisers.   It is recommended investors conduct their own due diligence on any investment including seeking professional advice from a certified investment adviser before entering into any transaction. The performance data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that such calculations are not guaranteed by these sources, the information providers, or any other person or entity, and may not be complete.   From time to time, reference may be made in our information materials to prior articles and opinions we have provided.   These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current.  As markets change continuously, previously provided information and data may not be current and should not be relied upon.

Investmentscore.com Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules