Not Advice

Don't Confuse the Market with the Economy

Lots to be concerned about in the world, but all I’m going to say is be very careful being too bearish with your investments, or over-allocating to gold which every alt-news site seems to be affiliate marketing. We are not going back on a gold standard. Things are not always what they seem. Stay balanced.

Here’s my personal current chart for the Nasdaq, after this current correction (may be over already). If you find yourself panicking and selling at exact market bottoms and buying into market tops when you “can’t stand missing out” anymore.. you may want to give this some thought. (There are enough badies already trying to shoot you in to foot without doing it to yourself :)

Folks, if the market diverges from your premise, then it should lead you to only one conclusion: you, and not the market, are wrong. Again, may I remind you of the famous words of Jesse Livermore:

"A prudent speculator never argues with the tape. Markets are never wrong, opinions often are."

Truth is, there is little correlation between “economic news” (including interest rates) and big market trends. It’s very easy to be scared out of a good portfolio because “everything’s going to shit”

Avi Gilbert does the best job of any analyst I know in illustrating this, year after year.

https://seekingalpha.com/article/4624883-sentiment-speaks-reasons-why-you-should-ignore-all-the-reasons-the-market-should-do-something

Here’s just one tiny example:

What do you think would have happened if you "took cover" or cashed out your investment portfolio after hearing news of the unprecedented Japanese attack on Pearl Harbor, knowing it meant the start of a new World War? 

It's worth considering, in light of current global conflicts and uncertainty. Would you have "gone to cash" for a few months or even years? 

Barton Biggs was arguably one of the finest minds on Wall Street. As an investment strategist, he had great respect for markets and their complexities and pitfalls. He never succumbed to "gloom and doom" syndrome of to the "madness of crowds" trap.

In his book "Wealth, War and Wisdom", Barton Biggs analyzed stock market behavior during the key events of World War II and previous wars, and the results are truly fascinating as you can see in the chart below.

Had you "rationally" panicked and sold after hearing of the bombing of Pearl Harbor, you would have missed the start of one of the greatest BULL MARKETS in history.

None of this is “financial advice”. So do you own due diligence… ALWAYS.

I just hate to see my otherwise like minded friends continually getting hurt by being offsides, cycle after market cycle. I know someone who’s been “in gold” since “Beck told him to” before the 2008 crisis. He’s still waiting to make money net of inflation, while many passive funds have doubled or tripled. Hell, even a long-term CD has blown that away.

I just don’t want to hear about putting “Everything” into gold or buying Iraqi Dinars from folks that are otherwise wide awake. Conservative commentators, even the ones I like, are NOT market experts. Truth be told, some have cost folks who followed their advice a shit ton of money. Caveat Emptor!

Here are last ten years. Be careful who’s advice you follow. Get good data.

(bottom chart lines are silver, with gold stocks and gold bullion just above)