Hey there Mike. Today’s market moves (The collapse of Gold in particular) reminded me of a disagreement I recently had with a truck driver I happened to cross paths with. We ended up discussing the markets and he mentioned that he happened to recently come into a ton of money. He starts telling me all the reasons why the metals is the place to go. I never revealed to him that I have experience as a trader and I happen to watch many many markets on a daily basis. I knew that what he was saying was nonsense because I knew by heart the approximate price of Gold and that it was in a steady downtrend. When I explained this to him, he rudely corrected me and told me that actually Silver is the place to put your money. I then informed him that Silver and Gold are highly correlated markets and that the two move almost in tandem. When Gold goes down, Silver usually goes with it. He then rudely corrected me again, adding in that “he has actually had schooling on these matters” thinking that that would shut me up because he “knows what he’s talking about”. I then told him that if he has had financially schooling then he should well know that the two markets are highly correlated and that any school that teaches fundamental investing will teach you that the long term [buy and hold] track record for the metals is horrific. I then told him that if I were to pull up a chart of Silver and another of Gold and put them side by side covering the names and prices, I bet he couldn’t even tell me which was which because they look nearly identical. Anyway Mike I just wanted to share that story with you to illustrate the difference between the fundamentalist mentality and mentality of traders and even aspiring traders. The fundamentalist trucker is still thinking about the meteoric rise in the metals in the past and is now riding it into the dirt. Traders on the other hand already made our money on the rise, and now we are all short and trying to determine whether we should cover on today’s break or move our stop down and lock in some profits or add to our current positions. When will the fundamentalists learn Mike?
Thanks! They won’t learn. Guaranteed.