-- Posted Thursday, 8 June 2006 | Digg This Article
| Source: GoldSeek.com
For investors who’d rather be smart than lucky
Here’s a Rick’s Picks subscriber, Pat P., with $200,000 to burn. What would you do if you were in his shoes? He writes as follows:
“Like you, I am of the opinion that the U.S. financial system and equity markets are on the verge of an implosion the will make previous crashes look like mere hiccups. I've been mostly in cash for the last month or so waiting patiently for gold to bottom and the Dow to top out. I agree with you that gold has more downside, but do you think perhaps that the Dow has finally reached a point it will never again see in our lifetimes?
“I have $200K put aside as what I would consider ‘expendable risk capital’ that I would be willing to bet on gold or shorting the Dow, and let it ride till whenever! I'm itching to put this money to work. I'm not concerned with catching the top in the Dow or the bottom in gold. Is now a good time to just ‘do it’ and be patient?”
Yes, just do it, Pat, and be patient. If you can kiss every penny of that $200,000 goodbye without changing your lifestyle or harming those who depend on you financially, it’s as good a time as we’ve seen in a long while to play fast and loose with surplus cash. Before you take the plunge, though, check out The Hustler, one of the great films of the last fifty years, since it might inspire you. By the time Paul Newman’s “Fast” Eddie Felson returns to Ames Billiard Hall for a rematch with Minnesota Fats, he’s had his thumbs broken, his girlfriend has committed suicide, and he’s scraping the bottom of the financial barrel. Any bear who has survived the stock market’s bewildering climb over the last few years can probably empathize.
Of the speculative strategies you’re considering, being long gold seems somewhat less risky to me right now than being short the market. I explained here yesterday why I think gold’s next bull leg will be spectacular (and soon!). The stock market’s crash will be no less dramatic when it finally comes, but no one should doubt by now that it could be postponed for much longer than most of us are capable of imagining. There is also the risk that a short-squeeze could inflict one final, devastating blow to bears before stocks finally plunge. But with the housing boom fading, and with it the consumer economy, it’s hard to imagine we’ll see more than an occasional one-day-wonder rally, courtesy of all those nail-biting, lemming-emulating Fed-watchers. A straddle that leaves you long gold and short stocks at the same time might be the best way to go. Indeed, it’s difficult for me to imagine how one could lose on both sides of that position for long, especially if it’s tweaked with some cheap leverage in puts and calls.
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Learn My Secrets
Would you like to be able to forecast trends and price reversals as accurately and confidently as Rick’s Picks? Have you tried other trading systems, only to find them too complicated or otherwise unhelpful? Then don’t miss my Hidden Pivot Seminar this autumn in New York City. Plans are firming for a weekend session in early October, so please let me know via e-mail if you think you might attend. This will be a no-frills version of the course that I gave in Denver, offered at a significant saving over the original price.
There will probably be just one more session offered after that on the West Coast, but that would be the last for a long while. The course includes post-grad mentoring via a chat group that some of my former students have set up. If you’ve been impressed with the accuracy of my forecasts, this is an opportunity you cannot afford to pass up. Let me hear from you soon, since seat space is limited.
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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2006, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Thursday, 8 June 2006 | Digg This Article | Source: GoldSeek.com
