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Losing Graciously
There's a very well-known publisher of market commentary which - like me - has been largely bearish over the past two and a half years. What is irksome to me is that, in the face of a market which has done little but push higher all this time, they keep pointing to a chart showing that in "real dollars" (in their view, gold) the market has indeed been crashing.
Ummm, that's stupid. Gold is an asset, but it isn't used as money in our society. Do you buy groceries with it? Pay your mortgage with it? Pay school tuition with it? I didn't think so.
I could make ANY prediction about ANY market and be correct if you allowed me to choose some kind of "currency" as a benchmark. Over any span of time, you can find something which has gone either up or down in value to support your claim, if that's what you're allowed to use as your divisor.
Let's try this. I've been bearish on the market, as you know. Let's say that the shares of Apple, Inc. are the most meaningful form of "real money." How have I done? Looking at the chart below, I'd say I've been spot-on.
I realize there's a difference between Apple and gold, but not much. 99.9% of our transactions are done within the borders of the United States, using U.S. currency, so the nominal value of the stock market, measured in dollars, is the most accurate judge of how predictions have panned out. I've been, by and large, bearish. I've been wrong. I'm not going to completely lame-out on you and divide the stock market by the value of gold, for God's sake.
I lean bearish. It's my personality. To some, I looked like a genius in 2008 and early 2009. I wasn't. To some, I look like an idiot for my bearishness recently. I'm not. I'm neither an idiot nor a genius. I'm a very good chartist, and I've offered plenty of great trading ideas (and plenty of not-so-great ones), and my bearishness has been wrong for longer than I care to remember.
But at least I am man enough to say that without gimmicks. Sheesh.
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My target is DOW/Gold to drop below 2, at least
Religion is Greed, God wants you to be greedy. Just ask the GS Boys.
I have been following Prechter for a period of time. He had called a short on the S&P about 100 points ago with a short cover 100 points up. We hit the 100 pints at 1360 Friday. Wonder if he will acknoledge short buy in?
Gold is money. It always has been. It always will be. You say you can't buy anything at the store with it? And how much bread can you buy at the store with some Yen? Oh yeah. None. So I guess Yen isn't a currency like the dollar.
The fact is that the same people who have been saying the market would dump in terms of gold have also said the stock market would do well in terms of paper currency the WHOLE TIME for the same exact reason. Inflation and currency death.
I don't call your article losing graciously. I call it yet more denial. Thats fine. You can continue to be stubborn and continue to lose. Then when you realize why the dollar's survival is structurally impossible without tying it to gold at a higher price, you can buy some gold at 50k an ounce.
99% of your transactions are done in USD, kimosabe!
Tim Knight sounds like a man without any metals. I can't believe Zero Hedge gives this loser a platform, money manager my ass.
This egomaniacal self-promoter will be unbearable at ZH once the market goes down a percent or two. I'm surprised Tyler let this guy through!
Gold is not money - a medium of exchange - unless minted as coinage with a stamped face (fiat) value.
The author is correct that you cannot buy anything with just a lump of metal.
Whether it be gold, silver, copper and even paper, nothing is "money" unless assigned some face value that people generally trust as a means of exchange, for goods or services.
IF you happen to have some antique Silver Dollar, for instance, and try to spend it, a shop keeper will only give you what a current 'paper dollar' will buy ... no use arguing that the metal content is worth (say) $40 as a commodity.
Apple and many an individual stock has gone to zero. So far in six thousand years gold has retained value.
I would suggest stop looking at two or five year time frames go for 25 and 50 years. Gold is long term. Trading a few basis points on a technical move or chart pattern is for today or short term only.
The lust for gold has arguably caused more more strife between people than anything else ... until the advent of "black gold", i.e. OIL.
The USD ceased being "backed by gold" circa 1971.
If gold had been the answer to anything, then the Gold Rush of the 19th Century should have settled everything; but it did not ... nor the Oil Rush which shortly followed.
Greed is the main problem, not what happens to be the main trading commodity ... which ceased to be gold a long while ago.
Oil has taken centre-stage for about 100 years, hence the petrodollar and current wars.
Whilst I agree that using gold as a deflator is not useful at present (shock-horror), neither is taking a inflating currency as your yardstick.
you need to have half your investments in the market trend and half in what you know is right.
the market definately is not EFFICIENT!
But when it breaks, it will go deep and swift so be ready. Just don;t ask me when it will go
I'm thinking the government hacked Zero Hedge & planted this bullshit on the site so we'll all leave in disgust.
Either that or the mysterious Tyler Durden was drunk while picking articles.
"Pay attention to the Divisor" is the main point, plus he admitted he has made errors.
It is a worthwhile point that beats most of the posts trashing the guy. WTF? It is a solid point and a good thing to remember when you are trying to figure out if there is any real information in a chart.
Analysis of the chart patterns don't mean crap if the basic chart parameters are shit - and I have run across a few lately that seem pretty suspicious...
"I realize there's a difference between Apple and gold, but not much".
WTF? Gold has been money since before Christ &, in approximately 5,000 years, has not only retained its value but has appreciated.
Again, WTF?????????????????????????????????????????????????????????????????????
Too true. He's suffering from the following behavioral biases...
Recallability... He can't think back even as far as 1971 when the dollar was backed by gold, or back to 1792 when the dollar was defined as a specific weight in silver.
Confirmation... He's selectively using apple as a counterpoint since it 'proves' his point about using an arbitrary denominator. How much was an apple stock worth in 1971? Oh wait that's right it didn't fucking exist.
Regret aversion. Clearly he did not climb on the gold bandwagon in the last 10 years and has nothing to show (sp500 in nominal terms is flat, in real terms even with bullshit CPI inflation is probably worth 20% less). Now he has to justify to himself why gold is the wrong indicator.
Dumbass bias. This doesn't feature in the CFA curriculum, however it is evident in the illogicality of his thought process. He's just a dumbass.
OMG, besides whining on SlobofHope and leading his readers to fiancial ruin, he is bringing his egocentric selfsearching crap here.
There's a very well-known publisher of market commentary which - like me - has been largely bearish over the past two and a half years.
TWO AND A HALF YEARS he said at first
To some, I look like an idiot for my bearishness recently. I'm not.
You look like an idiot because two and a half years is not recently.
I'm a very good chartist, and I've offered plenty of great trading ideas
You are a dumb chartist since you trade your selfcentered ego and not the market.
Any reader calling you out on your trading ideas and views is being banned on SOH. Can we please ban this Knight on ZH ? A guy who is shorting SPX & GLD and showing SPX:GLD Ratio Chart is a halfwit.
Go back home and study asset classes before you talk about Gold again and how to pay with Gold.
Tim Knight : GLD Ratio is very high as he still does not have any.
I thought TK's first article to somehow make it on here was bad. This article is worse. Please please do not ruin ZH with self serving, ego centric, emotionally based self searching such as this. How this is informative, except to TK's therapist is beyond me. What a steaming pile. How this article possibly translates into anything actionable is beyond me. Can you say "curve fitting?" Or better yet, we have to create a new phrase: "chart fitting." How many times, how many days do you have to be wrong before you fianlly realize that being a perma anything is stupid? Seriously????
I love Zero Hedge, and youz guyz are a hoot! Maybe the Fed will sequester all the extra trillions in the banks and nothing much will happen. Griffin said something like that in "Jekyll Island" though not exactly. No hyper inflation will occur if the bankers don't or can't loan it out.
and a loser.... or should I say cult leader of losers
U should GTF out of here Timmay we know where to find you if so inclined
You seem nice. Smart, not so much.
Actually he's pretty smart because at least he realizes that TK needs to retreat back to his own little dominion. His posts thus far have been worthless. Seriously - a sort of mea cupla on being bearish and wrong - and yet TK is still bearish - wonder hopw that will turn out?
Nummy, or clone of same; is that you?
me and Dennis always right in hindsight
Well...as a chartist ..I assume that you have had stop losses in place. Perhaps you have had a lot of them hit.
Abelson was right...but woefully wrrong. Dear Alan did not presume that any US central ,banker would have the facility to just "print".
Printing is going to cause a huge problem. Hopefully those who advocated printing will suffer the same losses as Abelson.
Tim.
You and I think much alike. I don't like moving to a gold standard because gold (and silver) are concentrated in the hands of a relative few, mined in geopolitical hotbeds and, therefore, easy to manipulate. I appreciate your views, but to ignore the obvious loss in purchasing power of the FRN, as measured by gold or any other hard asset, is folly. The fact is, anyone who has been "right" about this equity market has been rewarded with significant loss of purchasing power, higher unemployment/underemployment, higher fuel prices, a stagnant housing market, etc. That's the real story, not a rising stock market.
Dear Cursive,
We are on a de facto gold standard, but even this is being openly manipulated now in such an 'in your face' manner that one wonders whether it is a show of force or simply a sign of having lost control.
De facto because with so many more knowledgeable people today by virtue of sites like ZH----they cannot hide the constant devaluation of the dollar as they could when it was virtually pegged to the dollar during the Bretton Woods era.
I don't like gold because it is too heavy, but there is nothing else more stable and fungible.
You are covered if you have gold against the devaluation, but gold is not going to take our places on the street.
If the machine keeps gold in this low range, those countries that have these excess dollars will simply buy it all up and the US will be even further behind.
This is why going into the street is so important; the rest of the world has gone ahead without us---they don't give a fuck what we do om
As the dollar depreciates, gold will get much lighter.
Fixed it for us.
Don't put off till tomorrow what you can do today.
@LowProfile
I own three metals in quantity and I can assure you that lead is my favorite. I also have a penchant for pearl handles, but that's more for show than business.
That would be a great t-shirt slogan. Something like "Lead is MY precious metal"
@Dane17
Well played. Please send this idea to Tyler and/or WB7. You should probably contact the NRA with this idea.
You cannot really know what is going on with an asset that a person or country can burry some place. This market is real simple. Apple has a product line that is highly demanded by global consumers, they have a locked down vertical supply chain, and are growing top line and EBITDA at more than 50%. This is a DCF models wet dream. They are sucking the profitability out of industries like Telekom services, look at the recent ZH piece on S&P profitability. In an environment where every global bank has a hugh mark to market hole and central banks keep their foot on the gas, a company with Apples growth is king and short sellers constantly have their head on the block. That is reality. Of course, Greece should default and cause a crisis that could derail the global economy, but for 10s of billions every six months or so, the powers that be are not going to allow another potential 10s of trillions hole to form.
Tim? Tim Knight? Sorry, never heard of him. Wait, was he one of those guys on the Kessel run?
Do a chart comparison with something useful. How about price of a 750Mb CD storage disk as the base. Market probably looks fabulous.
Well hell Tim Reggie has been bearish on AAPL and claims he has been right, you are being to hard on yourself.
Anything I got that you want you can pay for with gold. No problem. Happy to oblige.
There has been no intellectual reason for a bullish market other than manipulation by the Fed and Executive branch. If one has knowledge of what they are doing as opposed to what the economy will produce then you have a winning hand.
Todays market winners are lucky or have an inside scoop on what the controllers /manipulators are going to do.
The real economy has shrunk outside a few companies like McDonalds, Dollar Store and Apple to name a few.
Best bet is to stay out of the market.
How did this get through the firewall? Prepare for spontaneous human combustion of the peasants.
Thx, Tim .
Once upon the time, there was a company called "Apple" and they had something to do with computing .
... I suppose trade mark "Tamagochi" still too expensive, despite of all the cash ...
Don't feel bad Tim. Alan Abelson of Barron's has been bearish since 2600 on the Dow. You can look it up.
On the other hand, most of the individual stocks he has panned were, in fact, dogs. Our day will come;)
Does it change my views on this BS market......NO
These Markets are completely fake. They tell a tale of total lack of true liquidity. A machine can invent and sustain its own reality. but this is the path to the guillotine.
Instead of 'Let then eat cake!', the cry is :'But the market is still going up!'.
I suspect, however, the outcome will be the same; in every country people are in the streets---even, finally, in the US of A.
The only place this author was wrong, like so many of us, was in not comprehending what can be done with a market without people by the machine operator.
Vote with your feet-----hit the street
Good luck to each of us om
If you believe that stocks, or a particular stock, can rise forever, then you must believe that business can rise forever, without end. That there could be 9,10,11 billion people on this planet, all of them buying more and more stuff, all the time, and getting richer and richer.
The problem is that the resources of this spherical planet are finite. They might be abundant indeed, but they are finite. And no amount of energy short of nuclear fusion is going to allow the exploration of other planets. And do we even want that? Do you want Goldman Sachs and Citigroup on the moon?
Gold, on the other hand, can in theory rise forever because it is wholly independent of whether the economy grows or doesn't grow, whether resources rise or don't. It can be directly related to how much fiat money is being created, and fall into stronger and stronger hands as years go by. Similar to say, diamonds or fine art or prime land, etc.
Now, I don't think it will rise forever. But it will rise for a long, long time. And why? Because the supply of fiat is infinite and is being created all the time. There's no shortage of fiat, which means there's always a bid somewhere for gold, even at higher prices. At higher prices, it's simply the wealthier who will gobble it up.
But who will be left to buy Apple when people tire of buying Iphone version 12? Or if the supply chains break down? Or if those peasants in China decide to revolt?
There's always a bid for gold, somewhere. You can't say the same for stocks. Which makes gold the place to be.
Awesome. How frigging refreshing. I lean bearish too. Bears hibernate, then emerge.
Hungry...
Kudos to you Tim! We've all been on the wrong side more than once, and instead of trying to explain our 'mistake' away as the person you write about has tried to (btw Gartman? Sounds like something he'd do...), we nut up and say it "we were wrong, it happens". Happy trading!