Gyroscopic Investing

The 1-year look-back Time Series Momentum picture for gold just today is that is better than US Aggregate bonds or US Short Term Bonds. So if it is in the investor's opportunity set, they have a new buy signal today.

dualstow wrote: Things may drop again tomorrow, but what a day. Time to celebrate.

It will just be a temporary drop, the stock market is far from bottom yet.

lordmetroid wrote:

dualstow wrote: Things may drop again tomorrow, but what a day. Time to celebrate.

It will just be a temporary drop, the stock market is far from bottom yet.

It is?

Gold down 2.25%
I'm not surprised and acted accordingly.
Short covering. Period.

A thought always comes to mind when gold rallies. "We will not see a bull market in gold unless there is higher than expected inflation..." HB

A breather had to be expected.  Certainly if we can hold above 1200 when the US opens tomorrow, a decent sign.  If not, well, we've all seen the show many times before.

Cortopassi wrote: A breather had to be expected.  Certainly if we can hold above 1200 when the US opens tomorrow, a decent sign.  If not, well, we've all seen the show many times before.

I have noticed a pattern on US market holidays. There is almost no gold trading going on during US business hours on these days, so it's a great time for manipulation totally random large moves to the downside.

The Nikkei Index was up over 6% today. DAX up over 2.5%. There is stock bullishness overseas but I don't think that anything fundamental changed over the weekend. Probably just folks moving into what is hot at the moment.

Gold is tanking, speculating that this is temporary but who knows. We may have actually hit the bottom of this a mini stock crash like late 2014. On the other hand we may be in for the long haul Japanese style. Who knows... I don't care!

Gold down almost 4%
This is going to be ugly.

buddtholomew wrote: Gold down almost 4%
This is going to be ugly.

What do you mean, Budd?  We are about 15% up from the start of the year to the peak close last week, and we've dropped about 3.5% back down.  I know it is disappointing to not see it go straight up 45 degrees to the right, but this was overdone short term.  We all felt it.  You had some balls to sell some, good for you. 

And now you feel vindicated because you at least temporarily made a good choice.

So is that it, though?  Do you ever put that 10% back in that you sold?  How?  When?  This is why PP is good for me.  In the past I would have done the same, and gone "Hah! I Beat You Mr. Market!"  And then I would sit there screwed, watch whatever I sold go back up past the point I sold, get worried that the train was leaving the station and in the end always ended up losing out by being too early or too late.

Enjoy it for now.  Personally, I see the equity market making one more attempt to suck people in "the bottom is in" bullcrap and after that, some serious pain for those not diversified like in the PP.

Don't get me wrong, I do not feel vindicated.
I don't want my overall portfolio value to decline period.
I am 4x25 still and only skimmed a little off the top to avoid regret.

barrett wrote: The Nikkei Index was up over 6% today. DAX up over 2.5%. There is stock bullishness overseas but I don't think that anything fundamental changed over the weekend. Probably just folks moving into what is hot at the moment.

Yes.

My belief is that stock market trends tend to track demographic trends.

When an economy is seeing a rise in the proportion of its population entering their peak earning and consumption years (ages 35-55), it's very good for stocks.  When those same groups start leaving the high production/high consumption demographic bands, stock markets start to suffer along with the underlying economy.

The first of the Baby Boomers began entering their peak earning and consumption years around 1982, which coincides almost exactly with the start of the historic 1982-2000 secular bull market for stocks.  Around 2001, the oldest Baby Boomers began exiting their peak earning and consumption years, which coincides almost exactly with the start of the current secular bear market for stocks.

The trouble with these demographics-driven market trends is that they tend to build on themselves as the demographic wave grows larger.  In the case of the Baby Boomers, they are still exiting their peak earning and consumption years, so it will be several more years before the beginning of the effects of the Baby Boomers exiting the workforce are felt.  The next shoe to drop in that process was the first of the Baby Boomers reaching age 65, which started in 2011, and will continue until the mid-2020s. 

If Japan is any guide (they are about a decade ahead of us with their demographics), it will be a LONG time before the U.S. stock market does much more than trade in a range.  We've been trading in a range now for about 16 years, which is probably a heck of a lot longer than many investors were imagining back in 2000, but these things can sometimes go on for WAY longer than people think they will.  Japan has been trading in a range WAY below the all time highs in that market for about 27 years now.  I wonder what a Japanese investor who was told that stocks always go up if given enough time must think.  27 years and nowhere near the all time highs.  Not even within 50% of the all time high.  The Japanese stock market would need to double and then gain another 20-30% just to get back to the 1989 all time high. 

These demographic factors can also create feedback loops that aggravate the problem as well.  In Japan, I get the impression that one of the reasons that marriage and having children has fallen out of favor is that it's so much harder to get a career started and to truly feel optimistic about the future with the stiff economic headwinds that never seem to stop blowing there.  With people having fewer children, the demographic problems will only get worse, and I can easily see the Japanese secular bear market continuing for another 20-30 years.

As I recall, during and in the wake of World War I as France realized it had lost a large chunk of an entire generation, its stock market took a dive and it took over 40 years for it to regain its footing and reach previous highs.

They never talk any of that stuff in Kiplinger's and Forbes.  Who would buy a magazine that said stuff like that?

Thanks for posting those thoughts, MT.

It would be great if a moderator could start a new thread with MT's post over in the Stocks section. Recently there have been so many folks on here wanting to go stocky heavy. Everyone has to ultimately decide how to divide up their 100% but I also think that ignoring Japan is to miss out on some important information. Whether or not it is actionable is up to individuals to decide obviously.

barrett wrote: Thanks for posting those thoughts, MT.

It would be great if a moderator could start a new thread with MT's post over in the Stocks section. Recently there have been so many folks on here wanting to go stocky heavy. Everyone has to ultimately decide how to divide up their 100% but I also think that ignoring Japan is to miss out on some important information. Whether or not it is actionable is up to individuals to decide obviously.

I did as you suggested.

Japan is the #3 economy in the world with a stable government.  Any generalizations about stock market returns should apply to Japan, especially the assumption that if you hang in there long enough you will be rewarded for the extra risk.  The fact that this simply hasn't occurred in Japan over the last three decades should give people pause when considering the validity of the belief that the stock market will always reward you if you wait long enough and the economy you are investing in remains stable and productive.

I am starting to gain some confidence in gold lately, it has roared back amazingly quickly from the last few days.  Very encouraging.

On another note, my PP is up over 4.5% YTD, I can't tell you how many years it has been since I have seen that much green.  And it is only Feb.  I hope if the stock market breaks that gold and TLT hold up their end and vice versa.

Cortopassi wrote: I am starting to gain some confidence in gold lately, it has roared back amazingly quickly from the last few days.  Very encouraging.

On another note, my PP is up over 4.5% YTD, I can't tell you how many years it has been since I have seen that much green.  And it is only Feb.  I hope if the stock market breaks that gold and TLT hold up their end and vice versa.

The advance in gold following the recent decline has been remarkable.
Again, I post this as a source of reference not to gloat about any market timing success (the $ are minimal, boost to psychology right or wrong is great).
IAU NAV at sale - 12.02; Current NAV 11.95 (-.58%) and still below recent high of 12.19 (-1.9%).
If the PP performed like this in 2015 I would write a book about it 

This is really hurting my tax-loss harvesting planned for the end of the month.  Some of my lots are now positive!

dragoncar wrote: This is really hurting my tax-loss harvesting planned for the end of the month.  Some of my lots are now positive!

I think that's called a capital gain. Not sure if it applies to gold since haven't see an example since 2011.

Yee-ha?

Libertarian666 wrote: Yee-ha?

This is one of those amusing days where everything is up.

Followed by the not so amusing day when everything is down...

Cortopassi wrote: Followed by the not so amusing day when everything is down...

Yep 

I made a large IAU ETF buy in my IRA based on gold momentum considerations. If it sticks, I will gradually convert the IAU in the IRA to physical non-IRA, on spot price dips.

ochotona wrote: I made a large IAU ETF buy in my IRA based on gold momentum considerations. If it sticks, I will gradually convert the IAU in the IRA to physical non-IRA, on spot price dips.

Although  not momentum-based, I also like IAU in my retirement accounts and coins in taxable. Less hassle.

I don't know if the gyrations are over after the jobs report, but who expected a V shaped response after a very good report?  Not me.  Please educate me.  These things always do differently than I expect!