Sorry if the title to this post offends you, but I think it’s funny and drives a VERY important point about what it takes to be successful at trading.
Trading is difficult for one reason and one reason ONLY.
Because it forces you to make psychologically impossible decisions: Buying when everyone is scared, selling when everyone is excited with greed.
For example, in early July I wrote that I was going to buy one of the most HATED stocks in Wall Street – take a look at this chart:
By the way – my decision to buy Goldman Sachs was a bit unpopular with folks. Take a look at what some people said about it on facebook (and some of the stuff was pretty angry):
This was particularly a tough decision as the financial stocks were in deep trouble at the time – Barclays had the LIBOR scandal and JP Morgan had lost billions.
Remember: The most profitable trades are usually the most difficult ones. Everyone will think you’re crazy for thinking different.
The more unpopular an asset or trade is, the more likely it is that it is the right decision.
In early August I recommended Apple (AAPL) as I believed it was about to explode higher. See what happened next:
AAPL spiralled from $620 to $700. Notice the negative divergence now as AAPL is showing signs of exhaustion.
Markoff W. wrote to me:
“Hi Alessio, Look I just wanted to thank you once again because I am already in profit with Apple. I watched your
last update on Apple today and got in a trade today at 632.00. I am still doing great and thank to you.”
Right now, the hard decision is whether to buy more gold and silver when both these metals are over-extended and everyone including my taxi driver is getting excited about them.
Don’t get me wrong. In the long term I still think these metals will go higher. But in the short term I would wait for a correction to buy these metals again at a cheaper price.
A likely correction would be to $1700. Maybe even $1650 if we can be that lucky. Anything lower than $1650 would be a godsend.
Do you agree with the views I expressed in this post? Let me know by leaving your comments below, even if you disagree.
For more information about trading the markets visit https://www.leadingtrader.com
To be honest Alessio, in July/August you said in a radio interview that gold was in a bubble, that everyone was stashing gold, and that buying at those prices was a douche move. The above chart speaks by itself, not buying when gold was in the 1600 range has been an error, I’m not sure the pullback you are waiting for will materialize, probably you have lost the opportunity to buy at the price you mention.
I was almost reconsidering my strategy, since in that interview you said that it is important to recognize when someone is wrong by taking the loss and moving the money somewhere else. Fortunately, I did not follow your advise
Hi there. Thanks for your comment. My own comment about Gold being in a bubble was referring to when Gold was at its all time highs at $1900 in September of 2011. At that point the smart move was to sell Gold. And indeed gold did sell off all the way to $1500 and did not truly recover until perhaps recently in September 2012. Gold needed a much needed correction. But if you look at what I said recently since late August I had actually advocated buying gold and I did not miss the buy opportunity – see the links below:
http://www.facebook.com/photo.php?fbid=10151068797959332&set=a.401397534331.181329.200543349331
https://www.leadingtrader.com/public/310812-2/
Thanks. Alessio
Well done then. However I do not agree with your terminology. Gold can’t be a bubble in Sep 2011 and then a “buy” in Aug 2012. When an asset is in a bubble, and the bubble blows up, it takes many years to become a “buy” again. Gold is very close to the highs of Sep 2011 in USD, but it is at all time high in EUR. If you look at the long term price chart of gold, there’s no bubble at all. IMHO, a bubble is when price doubles in 6 months, nothing similar happened with gold yet. You are a trader and your job is looking at the short term. I am a saver, and in my opinion PM are the best asset class to preserve wealth.
Anyway, I always enjoy following your blog.
Hello Alessio,
I have a coworker at my job who is a prepper. You know the types. Preparing for the end of the world. He keeps telling us everyday that the US dollar will collapse this month or right before US elections. There is a part of me that think sits B.S. and then there is a part of me that is listening.
I did a Google search and found articles like these:
beforeitsnews.com/conspiracy-theories/2012/08/lindsey-williams-the-dollar-will-collapse-shortly-after-the-elections-2443548.html
I know that they have been predicting this collapse since Forever, but do you think it could happen in the next 2 months?
Please advise.
Hey I posted a comment and it disappeared or it might still be awaiting admin approval.
I just want to know: do you think the dollar will crash this year?
Hi There Solomon. All the indicators by which I mean QE3, fundamentals and technicals seem to indicate yes that a falling US dollae is upon us. Of course, there will be the short term rallies as well, but the long term projections are a falling dollar. I am not sure what you mean by a “crash” in the US dollar. It’s already falling every since QE3 and perhaps before QE3 was announced. I am not expecting a major sudden crash no – but a gradual decline spanning many years.
Just saw your video on the topic above.
thank you for the piece of mind.
there is a fear monger at my job telling everyone to stock food and prepare for martial law in the US.
he is convinced that the dollar will completely collapse before election day.
my intuition and your expert advice tells me other wise.
thank you