Gold is Up, the Dollar is Down and What’s new?

I tried posting something last night, but my internet cut out, one the reasons I haven’t been posting lately. I haven’t much time so I’ll be brief.

Others include: Bad internet connections and much work. While I don’t have a good excuse for the former, the latter is of far greater importance. Ben Franklin said that the keys to wealth are Frugality and Industry. This blog is dedicated to Frugality. What I do off this blog is Industry.

I’ve also been polishing up on some reading. Recent books I’ve gone through are An Age of Turbulence Al’s new book, The Richest Man In Babylon by Richard Clason (see last post), Blink by Malcolm Gladwell (also author of The Tipping Point, both phenomenal reads), not to mention both of Ben Graham’s two best-sellers Security Analysis and The Intelligent Investor.

The Markets…
Little in the fundamentals has changed at all. Liquidity in the credit markets is still an issue, millions of ARM’s are still set to reset higher, housing inventory is still dangerously high, there are still signs of a banking crisis in places like England and the dollar is tanking 70’s style.

Nevertheless, Wall Street and the media have done a swell job at convincing the markets that the worst has past and the inevitable has abated. Notice how almost every analyst who comments on the credit crisis has shifted to a much more conservative “maybe-its-over” viewpoint. They say that this is a buying opportunity.

They are right on the opportunity part but they seem off on what we should be buying (or selling). You have to have a gall to go ahead and do something stupid like short the Dow right now, or buy gold, especially as their rallies seem so resilient.

The Dow Theory says sell. It said so in 2000, and even so that’s no reason to sell. But what we do see is a divergence from logic. Investors are trying to be “contrarians” and buy when the market is scared. But as they say “If you look around the room for a sucker and you can’t find him, you’re the sucker”. That seems to be the case for the market right now, which will nevertheless lead to the next round of volatility. Just wait for some piece of bad news and the markets will drop back to 13,000 faster than you can scream “Liquidate”!

But you have to be pretty “ballsy” (I believe the term is) to go ahead and do something as “speculative” as that. It’s plain stupid.

Or is it?

~~~~~~~

As I mentioned, I recently finished the book Blink and I think it has a very interesting lesson to tell us as experts in our general fields, and to investors (both passive and enterprising) in particular. I expect to post something on the topic in the near future.

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