I guess we’ve all noticed the increased amount of “Buy Gold&Silver” adds with reference to the rising prices of the precious metals. And if you’re not an expert it can be difficult to find a serious dealer. In fact, the odds of being swindled rise just s fast as the gold price. But here’s J.S, Kim at SmartKnowledeU with a few guidelines.
“Would it be possible to convert such big picture macro thinking into successful portfolio management? I thought this was particularly tricky since getting both the timing of big macro changes as well as the market’s recognition of them correct has proven at best a difficult proposition. Smart investors had been complaining about the housing bubble since at least 2001. I ignored Stan, rationalizing that even if he were right, there was no way to know when he would be right. This was an expensive error. The lesson that I have learned is that it isn’t reasonable to be agnostic about the big picture. For years I had believed that I didn’t need to take a view on the market or the economy because I considered myself to be a “bottom up” investor.”
Get the big picture wrong during the second phase of this monetary/economic crisis and you may never financially recover during this lifetime. That said, beware the bandwagon jumpers! Who are the bandwagon jumpers? The bandwagon jumpers are the antithesis of the big picture advisers. When traces of the smallest new uptrend appear, they are there to tell you this is the “next” big thing and that you will lose out by not hopping on board the bandwagon right now. When US, European, and Asian markets rose during the beginning of the year, the bandwagon jumpers were the first ones on your doorstep to sell you the false story of economic recovery instead of revealing the horrible fundamental economic conditions and the monetary debasement policies that were being pursued by Central Banks inside the US, European and Asian nations.
The bandwagon jumpers screamed that a new bull market was here and that time was slipping away as you stood on the sidelines. When the major markets started to fail and gold and silver started to perform, the bandwagon jumpers were the ones that bombarded you with emails about investing in gold and silver, even though five years ago, four years ago, three years ago, or even two years ago, they had never mentioned gold and silver to you a single time. The bandwagon jumpers were the ones screaming about prolonged deflationary periods three months ago but now scream about inflation concerns. “Gold and silver are hot now, so climb on board!” they yell.
It’s easy to separate the big picture guys from the bandwagon jumpers because the big picture guys’ story has remained remarkably consistent for the past five years as the bandwagon jumpers jump from hot item to hot item to sell you. This is not to say that the big picture guys won’t adjust their game plan to changing market conditions because if they are smart, they will. However, ever twist and turn in market conditions does not threaten their resolve or their understanding of the big picture so that they need to change their tune every two months to pitch the “hot” sell just to make their next buck as is always the case with the bandwagon jumpers.
Of course, through the luck of pure mathematical probabilities, the bandwagon jumpers will occasionally be right about their “hot” ticket item, but here is why you still want to avoid bandwagon jumpers at all costs. Bandwagon jumpers will push the idea of the next great bull market, and then two months later, when the stock market falters, they will change their minds and warn of a stock market crash. They warn against a gold bubble onemonth, and then two months later, recommend that you buy gold when gold continues to rise significantly.
Bandwagon jumpers, by nature, search for the best performing asset class over the previous six to twelve months, then develop marketing materials that falsely present themselves as experts in that asset class, and finally bombard potential clients with emails about this particular asset class until they receive multiple bites on the hooks they throw out there. Bandwagon jumpers are perpetually narrow sighted and react to changing market conditions instead of focusing on the big picture and planning for the likely direction of future market conditions. Because bandwagon jumpers are reactionary in their marketing versus pro-active, they are perpetually behind the performance curve, always suggesting assets after they’ve risen significantly or recommending selling assets after they’ve fallen significantly, and never quite understanding the proper reasons for executing either action.
Worse yet, bandwagon jumpers may even instruct you to purchase the worst possible vehicle in a good investment, such as the GLD ETF for gold or the SLV ETF for silver. Furthermore, their timing, due to their lack of understanding of the big picture, is likely to be atrocious and they are far more likely to steer you into buying assets at peaks instead of bottoms, and into selling assets at bottoms instead of peaks.
In conclusion, if you’re seeking to buy gold and silver now and have been bombarded by gold and silver investment opportunities from a company within the past 12 months that never urged you to buy either precious metal before 2007 or even before 2008, then you will know that this company is a bandwagon jumper, as the big picture of the global monetary crisis has been quite clear for at least five years now to anyone that has deemed it important enough to understand the big picture. When investing in gold and silver, be sure to steer clear of the bandwagon jumpers because in all likelihood they will cause you to lose money even as you should be making it.
Managing Director & Chief Investment Strategist
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