Thoughts on Gold? Howdy PopTart,
I too have been watching the space very closely and actually added to my VERY small positions with junior silver miners just yesterday.
First of all I am still of the mind that everyone should have a wee bit of precious metals in their portfolio. By wee, I'm talking 3-10%. I consider this to be a security blanket type of investment (something for that EOTWAWKI moment). My grandkids have their bed buddies and my pm holding is my bed buddy.
More pm than this core holding is speculation. Speculation is fine and fun so long as you realize the risks. Is now a good time to speculate? What do I know? When I play with investments, speculate, if you will, I lean towards momentum investing. In this I look for trends and when they appear, gradually scale in to my target amount - as long as the trend (momentum) is with me. Let's say you think this nascent trend in the pm's is going to last, and you figure you have $10K to play. Invest $2500 and see if you make money. If you do, add another $2500 and again, see if you make money. If you do, go with the remaining $5K. If at any time it doesn't make money - do not add any more. If it loses, or starts to, have a mental stop loss of say 5-10% at which point, you start scaling out of the play. If it drops some more - exit. This momentum style investing and my penchant for this particular arena, is why I added to my junior silver miners yesterday.
Now as for investing in pms. Funds and ETFs are of two types - bullion and mining stocks. Bullion ETFs will tax your gains at the Collectible rate of 28%. My favorite fund is still TGLDX which does have a little bullion but is taxed at normal cap gain rates. Or, you can go with CEF, a closed end bullion fund that is about 55/45 gold to silver. Or you can go with mining stock funds, ETFs or individual stocks. Lastly, and this is important to many people. For you core holding in pm's, the 'hard corps' recommend holding the physical metal. Although some peeps like safe deposit boxes and such, cripes, a roll of American Gold Eagles comes in a tube 2" tall and the size of a quarter. You can hide it in the oatmeal box and it's worth ~$25,000.
All this said, at this point in time, based upon the metrics of the gold/XAU and gold/silver ratios, miners are undervalued vs. bullion and silver is undervalued vs. gold. Note that this is on the margin. The great leverage is with the junior miners but this is also nose bleed territory. My only homerun in about 40 years of investing was with Silver Wheaton that I bought around 2002-3 for under 3 that I sold in the 40's. Cha-ching!
Right now there are several geopolitical factors at play. China's economy has slowed and they have been fairly steady gold buyers both by the CB and by individuals. The threat of terrorist attacks has really spooked the traveling public and this fear translates in to bullion demand. We also have the zika virus shutting down travel to central and south American and I am far from convinced that Rio is going to be able to even have the Olympics. Oh, and did I forget the Saud family's gas war to end all gas wars? And with Iran coming online, I don't see oil much higher than today for quite a while.
Now all this stuff is what Fear and Loathing are made of (where's Hunter?).
BUT when all is said and done, the POG is dependent upon the price of the U.S. Dollar. Because gold is priced in terms of the dollar and the dollar is the world's reserve currency, they normally are indirectly proportional and this has greatly contributed in the pull back in bullion prices from it's high of ~$1900 in 2011. Recall that the great bull market ran from 2002-3 until this time and commodity bull markets normally last in the 12-15 range. This is due to the complexity of bringing additional supply online in response to higher demand and prices (e.g. you have to find it).
As for the dollar, I've said it was trash since they started QE-nth but compared to any alternative currency, it is still the cleanest pair of dirty socks in the hamper. Lately, it's been showing some weakness but due to ???? Although, I'm starting to sense a negative impact on the dollar caused by the anger of the general public directed at Washington is the support for Trump and Sanders.
Sorry to ramble on,
and so it goes,
peace,
rono
Grading mutual funds with RARE analysis (updated 2/9 with grades for SC Growth funds) What am I doing wrong? When M* graphs the C- (b/w Closet indexer and Pretender) PRBLX against Large Blend for 8/7/6/5/4/3/2/1y, it always outperforms, sometimes significantly. Is that not the right measure?
Thoughts on Gold? Thanks Joe. I held GLD, CEF and GDX when the fed started its QE program and sold in 2011. They all did well during that time period.
My thought is exactly the scenario which you mention, which could prompt GLD and GDX to climb higher and likely SLV as well. But that's assuming this scenario plays out. Who knows? Thanks again for your reply!
Thoughts on Gold? First, I've always considered gold a very dicey investment. Some here do not even consider it an investment. It's liable to do anything, including doubling quickly or falling by half just as quickly. I'd be loath to suggest anyone touch it because you can get burnt really badly. Most gold funds invest in miners, not bullion, so it's technically incorrect to consider them the equivalent of gold. They're not, but do tend to benefit when gold rises.
Having said that, OPGSX is my best performer since early September when I bought it (+19%), also my best performer this year (+13%), also my only fund to show green yesterday. This may be simply the Broken Clock Phenomenon playing out. Even perennial laggard HSGFX is up 5% YTD.
My other better performing investments lately have been PRPFX and international bonds (notably RPIBX). Like gold, these types of investments benefit when the dollar weakens or looks like it is about to. Also, fear of both bonds and equities may be driving some investors into these investments.
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Added: If someone feels gold has a future, I'd be a lot more comfortable with them looking at a fund like HSTRX, which plays around a bit in the metal, but hedges against the kind of potential 25-50% losses gold funds are known for. It's up 3.5% YTD.
Caution: I'm not an expert and probably don't know what I'm talking about.
All Asset, All Authority.... All Out? For information purposes ... Although their long term performance numbers suffer PASAX (All Asset) is down year-to-date -1.7% while PAUAX (All Asset All Authority) is down -0.9%.
Still, I will pass on buying them back.
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Thoughts on Gold?
COP down 7% Hi slick. I don't kid myself that the trailing stop is the end-all. I'm hoping that it saves me from big losses more times then not. If it wip-saws me, so be it. Setting a "liberal" as you say stop at 15-20% kind of doesn't make sense to me. If you do that you pretty much lock in a big loss. To me at that point, if you still like the stock, it would be hold 'till it recovers. I have 2 I bought before implementing trailing stop like that. Mistakes, but I'll wait it out.
I can think of 2 examples lately where the trailing stop worked well. I bought AAPL back in late summer at about 110. The stock rose to around 123-124 and then started to trend down. My 6% stop from recent high sold me out at about 117. Not a huge profit but it kept me from a big loss. Apple was in the 90's last I looked.
Another example was CHKP. Bought at 68.5, rode it up to about 88 before it too started to dip. My stop took me out at about 82.5. Nice profit on that one. I like that stock, so I actually bought back in when it kept trending down at about 76. We'll see how that goes.
Those are a couple winning moves. I won't get into the SLB or BABA buys before deciding to use stops.
COP down 7%
COP down 7% @MikeM: I too have two buckets for stocks, and virtually all of my stocks are in iras, so preserving of capital is not necessarily priority one, although still important. I learned early on that setting a stop loss almost guarantees it will hit it :) My long term stock stop losses were fairly liberal (generally
15-20% down from purchase price) and once hit they went right back above and stayed above there for the most part. Some I bought back, some I let go. My other bucket , some people call spifs, are always 5% or less of portfolio and primarily are composed of 4 or 5 small or midcap stocks. There are not intended to be long term holds, but one or two I have kept for more than one year, but watch very closely. I no longer use stop losses on these either. I just watch them closely, retired.
COP down 7% I believe this is why @junkster prefers low volatility assets so that you have more time without taking deep losses to make a judgment call rather than an automated decision but the idea of having an exit plan is still valid. He can correct me if I am wrong.I prefer low volatility and trend persistency. That way I can get
100% invested as quickly as possible and capitalize on the compound effect with my account. I can only get that in particular bond fund categories. Also why I stick only with the open end because ETFs are far too volatile for my tastes. I've always been into low volatility and trend persistency. I keyed off certain patterns of such when trading equity funds and even daytrading stock index futures back in the days. Can't trade/invest in individual stocks or baskets of such because of my propensity to ramp up as quickly as possible.
All Asset, All Authority.... All Out? But no worries, when it comes roaring back 40% (at some point TBD) and gets you back to breakeven, Arnott will crow about how, see? Dogmatic adherence to a strategy come hell or high water is a good idea and see -- I was right. No thanks.
I bailed in 2012 (I think) and never looked back. Sounded good on paper, but keeping a 20% equity short position on in the face of Fed intervention and a raging, if not artificially-produced bull market, was inexcusable. Sure, you could by his PAAIX instead that didn't have the short position, but still. The very nature of PAUIX coupled with his dogmatic operation of it, led to this situation. Good riddance!
Arnott's QOTD is pure comedy gold: "“Now that these strategies are a bargain, we’re seeing outflows. It’s human nature.” No, it's your sub-par multi-year performance that lost people money who now can't buy into these 'bargains' and/or are simply fed up with you.
I remember reading many posts on *M about how Arnott was the best thing since sliced bread. I bought into it. Luckily, I didn't lose a lot of money but the fund was very stagnant and didn't sit well with me over time. I'm glad to have bailed out.
COP down 7% Buying individual, stocks to be honest, is just a recent "hobby" for me. I set aside a small bucket to play with. The first thing I learned (after mistakes) was to establish with yourself your mind set for the purchase. My mind-set had to be 1 of 2 categories, buy it and hold it, or speculating to hopefully make a profit over a short or long time. Speculating definitely requires establishing the sell point.
If you want to preserve capital as Junkster said, you must set a trailing-stop on the stock. You have to do that right after your purchase. I decided my method would be the 1% rule. Never loose more than 1% of your stock bucket on any single purchase. For example, if you decide you have $10,000 to invest (or play with in my case) in stocks and spend $2000 on a specific stock, set the trailing stop at 5% (($10,000 x 1%)/$2000) = 5%. Allow the stock to trend up (hopefully) and if it drops 5% from it's recent high - auto sell.
Are there other sell rules people use? Like I said, I'm new at this and really have had mixed results. My worst buys were before implementing the trailing stop - for sure. Still hanging on to my first buy, SLB. Darn stock increased ~20% at one point for me, then lost all that and more. But that helped me learn.
