Huge drop in gold!

Discussion in 'Coin Chat' started by kyrow, Apr 15, 2013.

Page 2 of 2
  1. spock1k

    spock1k King of Hearts

    where do i go to become the writer?
     
    spock1k, Apr 16, 2013
    #21 + Quote Reply
  2. Avatar

    Guest User Guest



    to hide this ad.
  3. medoraman

    medoraman Supporter! Supporter

    Small investors buy high and sell low. Fact of life. They make investment decisions with their heart and stomach, not their head. There is a very good reason why investment professionals track what small investor sentiment is, its because the exact opposits of what they are doing is statistically always the best investment.

    Not saying this is true of folks here, since by searching out knowledge investors here have become non-typical small investors. Please no one here get mad at my previous comments.

    I about posted here a few months ago my runins with some guys at a coinshop, but didn't want the grief. I was talking to them, and all said they were "serious investors" in silver. When i started asking them questions, all parroted back buzz phases from bullion websites, like "paper money will go back to its innate worth", and hyperinflation yada yada yada. When one said something, all wiuld nod their heads in agreement, like they had just come up with a thought between them.

    That is the day i knew pm was in trouble. Not any technical analysis, not discussions here, but seeing these buyers refusing to think for themselves, just accepting the BS being hand fed to them like it was gospel, that was my proof i was not missing out by not buying $30 silver this year. They were my contra indicator.
     
    medoraman, Apr 16, 2013
    #22 + Quote Reply
  4. RaceBannon

    RaceBannon Member

    http://www.cnbc.com/id/100646847

    The link above makes for very interesting reading. The thesis of this article: "Scariest Part of Gold Crash? No One Knows Why it Happened"
     
    RaceBannon, Apr 16, 2013
    #23 + Quote Reply
  5. drathbun

    drathbun Well-Known Member

    Interesting article, thanks for the link. I liked this paragraph:


    But my favorite line was this:
     
    drathbun, Apr 16, 2013
    #24 + Quote Reply
  6. geekpryde

    geekpryde Husband and Father Moderator

    Actually most investment professionals, large "sophisticated" investors, endowments, and hedge funds all do the same thing (buy high and sell low, buy what's trendy, and basically always do the opposite of what they should). Or at least that's what all the scholarly literature on the subject says. Regardless of size, people who have a long term horizon and strong stomach's can stick to their investment philosophy and laugh all the way to the bank when everyone else is panic selling or frenzy buying.

    Certainly after fees and any taxes, most active investors (no matter how large), do poorly compared to their passive counterparts after taking into consideration things like survivorship bias.

    Only "strong hands" have the money/wherewithal to stay in, and many large investors do not have "strong hands" when push comes to shove, and people on a committee start freaking out, or Hedge funds need to liquidate investments as investors start pulling money.

    A small investor who is only accountable to themselves (and their spouse), is ideally suited to ignore all the market noise, assuming they are mentally prepared for crashes, bubbles, and everything in between. Someone with a passive index based approach can maximize returns with little effort and with low stress. Certainly you are correct that most small investors hurt themselves by making emotionally driven bad investment decisions, but my point is that so does everyone else.

    If anyone cares for some additional reading on the history of financial speculation (including sections on Gold), I highly recommend:

    "Devil Take the Hindmost: A History of Financial Speculation" http://www.amazon.com/Devil-Take-Hindmost-Financial-Speculation/dp/0452281806
    "The Four Pillars of Investing: Lessons for Building a Winning Portfolio http://www.amazon.com/The-Four-Pillars-Investing-Portfolio/dp/0071747052

    If you don't want to buy a book, I read a lot of financial blogs and wanted to do a quick list of my favorites. Probably spent some time with about 50 financial blogs, and vast majority of them are crap, or they don’t produce their own content.

    Here are the best of the best in my opinion. I read these every day:

    Simpler (quick, easy to read, easy to understand, but VERY insightful)

    Alan Roth
    Jason Zweig
    Larry Swedroe
    Rick Ferri

    More Complex (longer posts, harder to understand sometimes, need more thought, but some very detailed reporting)

    David Merkel (site is awesome, read back through the archives)
    Deal Breaker (lots of Tongue-in-cheek commentary and sarcasm)

    Essay / Papers (advanced reading)

    http://www.norstad.org/finance/total.html
    http://www.norstad.org/finance/risk-and-time.html
    http://www.norstad.org/finance/rtm-and-forecasting.html
    http://www.vanguard.com/bogle_site/sp20020626.html

    I hope at least one person finds something I posted here beneficial,

    Matt
     
    geekpryde, Apr 16, 2013
    #25 + Quote Reply
  7. Tinpot

    Tinpot Well-Known Member


    And that is why the average investor does poorly, they are motivated by greed and fear, not logic.
     
    Tinpot, Apr 16, 2013
    #26 + Quote Reply
Page 2 of 2
Draft saved Draft deleted

Share This Page