The way the stock market has been behaving it is a wonder any sane person is in the stock market. If 70% of the market is traded by computers who use HFT then who are the other 30%? There appears to be a total of 15% of the market in workers 401k plans. http://www.401khelpcenter.com/faq/faq_25.html
I would imagine that of those 15% who have 401k plans most have no clue what they are doing. They invest blindly thinking their company match will cover any losses. This is so wrong. I am guessing that maybe 2%-5% of them actively know what they are doing and try to make long term investments and when the sectors fizzle out, they move it to another. That means that most 401k investors are strictly dumb money.
The final 15% must be long/short speculators, hedge funds and day traders. I think this is a close guess, but I don't think I am far off.
With that being the case and you are not going to beat the HFTs, they might beat the dumb money from the 401ks. However, you think that private speculators can really move the markets with only 15% share? Perhaps if they were all in a day traders union and bet the same way. That's a fat chance since they are all gamblers trying to outsmart each other.
So what can you do? Read charts and hope not to lose too much? Do you jump in and out based on overbought and oversold? Risk on and Risk off days? Trade based on a trend or the news? Set stops to get out before you lose too much or sell when you've made a few bucks?
I am not a gold or silver bug, but this is how I have steadily made money over the past few years. My PM's have been doing much better than the market. When Greece and the rest of the PIIGS implode then what? I assume the dominos will start to fall, panic will set in, wars may ensue and the music will stop. Bank after bank will topple. Other than the criminal banksters like JPM and GS and a few others who are the real market movers, there won't be a seat left to sit in. I am not talking gloom and doom, I am talking reality. I really believe that when TSHTF those holding paper of any sort be it stock, cash or paper gold will be the proverbial bag holders.
I don't think that gold will go to 5000 or silver will go to 500, but I do think that deflation will allow a PM holder to buy more of everything and isn't that the point? I saw a chart on one of the presentations I think that GAW linked to and it showed that it took 800 ounces of gold to buy the median price home in 2005 and now it takes 100. That is how I think Precious metals will appreciate. If you had bought gold at 300, 800 or even 1000 the average new car at a price of 35k would cost 35 gold coins. Now at nearly 1800 it would cost less than 20. Sure hindsight is 20/20 and there is the theory that every dog has its day, but have you looked at a 30 year gold chart in Indian Rupees? No wonder the entire country sees gold as savings and not as an investment.
This video is Louie CK a famous American comedian on Late Night TV and sent to my by Shaza
My new pride and joy purchase.
10 comments:
I think this video was hilarious. Thank you Shaza for sending this and Louie for putting things in perspective.
Not sure I agree that trading is impossible becuse of HFT. The assumption seems to be that it was easier before. I think it's always been difficult, above all from a psychological point of view.
On the subjects of PMs, silver is beginning to show some promising signs:
http://stockcharts.com/h-sc/ui?s=SLV&p=W&yr=3&mn=0&dy=0&id=p64641419507
Above all, the clear positive crossover on the MACD weekly. That is 'usually' a v good sign, especially after the prolnoged slope down. The fact the silver's holding on to recent gains is also encouraging, as is the fact that weejly RSI is staying over 50.
To be sure, there's a lot of work still to do. You're not gonig to get any sort of sustained bull with the 10 week ma beflow the 30 week. But the early signs are not bad.
Obvfiouslyt the time to buy silver is when nonoe's talking about it. Like now. Look at the volume on theat chart.
On the subject of gold, excellent article here:
http://www.acting-man.com/?p=14458
Snippet here:
It makes actually very little sense to compare the investment merits of gold to those of stocks and bonds in this manner. Rather, as Steve Saville has recently remarked, gold should be seen as part of one's cash holdings. It should be compared to alternative currencies in which one might want to hold one's cash – dollars, yen, euros, and so forth.
Mugabe I was just writing an opinion based on the information that I have, but I respect your opinion as well. Glad you are feeling better (at least I hope you are). Although I sold some silver to buy gold just as you did a while back I still hold silver and will buy more.
I like charting, but am frustrated as of late. I don't think my opinion is held by all, but you have to admit a lot of people have been burned by the market and will not be coming back. Also I think that I am correct in my sampling of people who invest in 401k plans. They don't have a clue.
You have to admit that the video did show how much tech has changed in the last 40 years and how we take it for granted.
"It makes actually very little sense to compare the investment merits of gold to those of stocks and bonds in this manner. "
Maybe so, but I do agree that gold is part of my cash holdings. It is appreciating whereas my dollars are depreciating. This is another reason I am not a big believer in holding cash.
I am also finding that buying these special silver coins like the Mammoth and I bought the 25 anniversary ASE and he bought the America the Beautiful series and I the Canadian Wildlife series can turn out to be a nice quick turnaround investment rather than just a buy and hold like I do with most of my ASEs. Getting the proof Gold Eagle today in the original box with the certificate of authenticity was well worth what I paid for it and I bought it for a lot cheaper than the US mint sells them. Now they are not sticking to my fingers like they used to.
I agree that a lot of people have been burned in the market. That's what happens in a bear market! People thought that the stockmarket, like housing, was some sort of ATM. Well, I suppose it is but it can suck money back as well as it give out.
Thanks v much for your good wishes. I'm back to about 80% now backwise. It does make you appreciate what a lot of folk have to go through every day, except what they have to put up is a lot worse than what I had ... although the first day was hellacious.
I am lying on the floor on a camping mat as I write this.
completely off topic, where is Tax Haven? Did the Feds catch up with him?
We don't know what happened to Taxhaven. He has not returned Shaza or my emails.
It really makes you appreciate your health when you don't have it.
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