Buy low, sell high – simple right?

Posted | 16/03/2015 / Views | 2878
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History repeats and prices ALWAYS revert to the mean versus ‘its different this time’…. We always have 2 choices in making investment decisions.  Call it math, call it human behaviour, it doesn’t matter.  It just is.

So right now we have US shares (of which Aussie/world inevitably follows) breaching an historic line.  Per the graph below, in 140 years the S&P500 has never seen seven years in a row of consecutive gains.  Never.  In 2014 it hit the magic 6 ‘line in the sand’ making 2015 the year 7 hurdle.

Buy low, sell high – simple right?

Gold and silver on the other hand (per the 30 yo Philadelphia Gold and Silver index – XAU – graphed below) in 30 years has never experienced more than 3 years of consecutive losses…. until 2014!

Buy low, sell high – simple right?

So right now you have financial markets breaching record high runs, and gold and silver exceeding record low runs.  Throw in a sky high USD and sky high bonds as well.   Which of these two looks to be the better long term buy right now???  Buy low sell, sell high… that is pretty simple math, it’s just not typical human behaviour…