Faber Likes The Gold Miners?

In a brief interview in this week’s Barron’s Marc Faber offers the following; Gold peaked at $1,921 an ounce in September 2011. Since then, it has been in a correction mode. Sentiment is bearish, but some countries are accumulating gold, notably China, which will buy an estimated 2,600 tons this year, exceeding annual production. Prices probably are bottoming.Gold-mining shares aren’t expensive either, although many exploration companies won’t make it. If you buy the miners, look for companies that have raised capital already or have sufficient reserves. They are best-positioned to survive the next few years if there is no upturn in the gold price. The Market Vectors Gold Miners ETF (GDX) is down 43% this year and down 51% in the last two years. Who knows if gold is bottoming as Faber says might be the case or if it is bottoming what that will mean for the miners but in terms of remembering how markets tend to work, at some point truly hated sectors and industries do come screaming back and the gold miners will be no exception. This is not a call to buy a specific thing right here just a reminder that things go from loved to hated back to loved all the time. It may or may not be rational but it happens. People who are very comfortable with investing in mining stocks will have a better sense of when they will turn around but they will and this will be worth paying attention to.  In related news, that dude still loves...

Back When Taleb Was Useful

The preface of Nassim Taleb’s book Fooled By Randomness includes the following; The kind of luck in finance is of the kind that nobody understands but most operators think they understand which provides us a magnification of the biases. Taleb is quick to point out that luck does favor hard work and those who are prepared. I would layer on top of this idea that what we do with bad luck is also very important. “Bad luck” will also be our own perception in that an event like 2008 will hurt the vast majority of people but it is easy to envision individuals viewing such an epic decline as their own bad luck…really it was a shared experience. The solution to not being done in by bad luck has to include not succumbing to the emotion caused by bad luck, remaining disciplined to whatever your strategy/methodology is and giving proper attention to things that are more likely in your control like saving habits and consumption habits. All market participants will have some combination of bad luck and good luck along the way which means another piece of the puzzle here is understanding that occasionally you will have bad luck, not just with investing but also in life. Accepting the fact bad luck will come along doesn’t mean being a negative person, quite the opposite as I think the ability to remember bad luck is apart of life and investing makes it easier to bounce...

Back When Taleb Was Useful

The preface of Nassim Taleb’s book Fooled By Randomness includes the following; The kind of luck in finance is of the kind that nobody understands but most operators think they understand which provides us a magnification of the biases. Taleb is quick to point out that luck does favor hard work and those who are prepared. I would layer on top of this idea that what we do with bad luck is also very important. “Bad luck” will also be our own perception in that an event like 2008 will hurt the vast majority of people but it is easy to envision individuals viewing such an epic decline as their own bad luck…really it was a shared experience. The solution to not being done in by bad luck has to include not succumbing to the emotion caused by bad luck, remaining disciplined to whatever your strategy/methodology is and giving proper attention to things that are more likely in your control like saving habits and consumption habits. All market participants will have some combination of bad luck and good luck along the way which means another piece of the puzzle here is understanding that occasionally you will have bad luck, not just with investing but also in life. Accepting the fact bad luck will come along doesn’t mean being a negative person, quite the opposite as I think the ability to remember bad luck is apart of life and investing makes it easier to bounce...