Posts filed under “Apprenticed Investor”
Last week, we published a 2,500-word opus on what lessons could be learned from the rise and fall of gold.
There was lots of feedback on the general concept and many of the specifics. By and large, the response was positive, with most of the pushback coming from those who were long gold or other metals. I thought it might be worthwhile to respond to some of the comments that came my way, both positive and negative.
1. Denial. I guess this should not have surprised me, but: People called the 38 percent drop from the peak a “pullback.” Really? That’s like saying leprosy is a dermatological condition.
It is not completely inaccurate to say that we don’t know for sure if the secular bull market in metals is over. I have no objection to anyone saying we don’t know how this ends.
But ask yourself this: If stocks fell 38 percent, what trader would not declare the secular bull market over? How much does something have to drop before anyone admits the trend is broken? I chalked that up to trader’s denial.
2. Not about gold. Quite a few people understood that the entire idea of the piece was not about gold, but rather used gold as a jumping off point to discuss investing errors in general. That the 10 “lessons” offered in this piece weren’t specific to gold was by design.
Some of the pushback said this critically – “These lessons don’t even apply to gold!” – which really confused me. It was supposed to be investing advice that could be applied to equities, bonds, real estate or commodities. I have done similar such “lessons” after elections, and about investing in general (see this and this).
Point 3 -10 continues here
> I did something different with my Sunday Washington Post Business Section this week. Starting with the 2,500 word long form discussion I wrote for Bloomberg, I simplified this and edited it down to half that length. The print version had the headline Bitten by the gold bug? You’ll do well to heed the…Read More
This morning, I have a massive 2500 word piece at Bloomberg looking at the rise and fall of Gold.
The key to the discussion are the 10 lessons that we all can takeaway from that cycle and the experiences of Gold investors. Hopefully, these will make us each better investors in the future.
Here is the intro:
“It has been quite the ride for gold: from under $500 an ounce a decade ago, to above $1,900 in 2011, gold gained more than 400 percent. Since its peak of ~$1,921.15 on Sept. 6, 2011, however, the shine is off the yellow metal. Gold plummeted 38 percent, recently breaking below $1,200. Yesterday’s close is within 5 percent of the lows, at $1,241.
If a 20 percent drop is described as a bear market, and a 30 percent fall is called a crash — what do we call gold’s almost 40 percent plummet?
This column is not an “I told-you-so” or an exercise in “Goldenfreude” (describing a “delight in gold bugs’ collective pain”). Rather, it is an attempt to learn some investing lessons from the epic rise and horrific fall of gold.
As an investor, I am a gold agnostic: When used properly, the metal is a potentially valuable tool in an investment arsenal. There are times when it makes for a profitable part of a portfolio, as in the 2000s. There are periods when it is a speculative and dangerous trade — such as the 2010s. There have also been decades when it does nothing, earning no return, generating no income, essentially dead weight to a portfolio, as in the 1980s and 1990s…”
Full column after the jump:
10 financial resolutions you can actually keep By Barry Ritholtz Washington Post, December 29, 2013 It’s that time of year, when many people resolve to be better: Gotta lose 20 pounds, stop smoking, start exercising. Human nature is such that come January, there will be a 20-minute wait for the elliptical machines in…Read More
I wrote this a decade ago, and if you keep only one resolution this year, this is the one it should be. It will open a cascade of improvements for your finances . . . Take Responsibility for Your Stock Losses Barry Ritholtz RealMoney.com, April 12, 2005 “He who blames others…Read More
Over the past few weeks, I have been trying to push back against the usual contingent of bears. In particular, I have argued that this bull cycle is not yet over, markets are not in bubble and that people have been sitting for too long in way too much cash. John Coumarianos of the Institutional…Read More
> My Sunday Washington Post Business Section column is out. This morning, we look at the question of How much cash should you hold in your portfolio?. This is yet another column that looks like its about investing but really is about psychology. As I noted prior, people have been sitting on big piles…Read More
> My Sunday Washington Post Business Section column is out. This morning, we look at the retail theater that is Black Friday: Beware of bad Shopmas data! Here’s an excerpt from the column: “The news media aren’t any better. They breathlessly cover shopping as if it were an Olympic event. The big-box retailers play right…Read More
Use the news: How to get the most out of financial media Barry Ritholtz Washington Post November 17 2013 Last time out, our topic was the signal-to-noise ratio when applied to investing. We looked at how to reduce the noise you consume in your daily information diet. The goal was to help you…Read More
Twice a year, S&P releases a “SPIVA Scorecard” – a report comparing the performance of Active Managers versus three passive indices. The S&P 500 large caps, S&P MidCap 400, and S&P SmallCap 600 are pitted against the median returns of active managers. In the most recent report, the trailing 12 months returns for these indices…Read More