Way back, sometime in the near-distant past (hard to see which), when the Fed started its quantitative easing program (QE), the price of gold shot up. The loudest voices among the clamoring mass of voices shouting doom told everyone to buy gold because hyperinflation would soon be the norm and the only thing that could protect you was gold.
The loudest of those voices told us gold would hit $5,000 per ounce, and many listened and a lot bought, but the more “prudent” voices simply said gold would go to $2,000, maybe $2,500, and most bought. The price of gold soared from under just over 800 in Feb 2009 to an all-time high of $1,921 in August 2011. Funny thing, but gold never reached $2,000, much less $5,000, and today the trend is clearly downward as gold now struggles to stay above $1,650. At the moment, the prospects for gold do not look good. So, then, why would the editor of a perma-bear financial newsletter suggest gold sentiment is improving? Oh, wait! Silly me! He is a perma bear.
- “Sentiment for gold is improving in the sense that more and more advisers and investors are turning bearish,” Marc Faber says.
Lest we forget, the “bearish” sentiment Faber references is the idea that all the bullish sentiment in the market is so strong it means the market will turn bearish. One big reason for the bearish sentiment is the recent strong inflow of money into mutual funds. Hmmm … Here is a perspective on that.
- “It’s a combination of apathy and befuddlement.”
That’s the Reformed Broker Josh Brown’s response to the notion that investors are euphoric over the Dow Jones Industrial Average briefly lurching over 14,000. It’s also a decent description of an experienced stock veterans’ reaction to the hype about a new bubble in equities. People who lived through two different horrific crashes in the last 15 years know what bubbles look like, and this isn’t it.
- Brown has three things to say to those paralyzed by fear given the rumored flood into stocks by the masses.
- 1. Whether or not individuals are buying stocks doesn’t matter. Stocks are up 127% since 2009 with outflows every month. It will take much more than one month of investing to move the needle on the price of a stock market valued at $14 trillion, give or take.
- 2. There’s real money buying. Endowments and institutions are the ones coming back into stocks, they’re just too embarrassed to say so.
- 3. Market timing is for suckers. “I know people who play market timers on TV,” he says, “but in reality it’s a very tough game to play.”
- Amen. The question for those all in cash is what burning bush or lightning strike was their omen of a crisis to come.
I know the above took up a lot of my writing real estate, but, as an educator, I feel his words have merit, especially since they reinforce my words, the same words I have been writing – that now is the time to play the market, now is the time to make your money work.
Okay, so here is a question for all you Apple aficionados, an excellent company by the way. How many versions of the iPhone can Apple make?
- An Apple watch, long whispered about (let’s face it, an Apple anything has long been whispered about) may actually be a reality soon, according to a New York Times report citing those tech-journalism stalwarts, “people familiar with” the matter.
The US and Europe took step two in the process of building a bigger economic partnership. Just the process will help move the European economy forward.
- The United States and European Union aim to start negotiating a vast Transatlantic free trade pact by June, though the plan confirmed on Wednesday faces many hurdles before it might help revive the world’s top two economies. A deal would be the most ambitious since the founding of the World Trade Organization (WTO) in 1995, embracing half of world output and a third of all trade.
Trade in the day; Invest in your life …
