Vi har vid ett flertal tillfällen den senaste tiden tagit upp att vi sannolikt kommer att få se en hel del volatilitet framöver när guld och silver går in i nästa uppgångsfas. Jim Sinclair nämnde t ex i en intervju med KWN nyligen att han såg framför sig svängningar i guld under en och samma dag på 100 dollar inom kort.
Nedan är ett urklipp från en intervju med den mycket framgångsrike Rick Rule, som förresten nyligen sålt sitt investmentbolag till ingen mindre än Eric Sprott, där han ger sin syn på just volatilitet och ger lite tips om hur man kan utnyttja detta som investerare, istället för att gripas av panik för att den stora ‘pappersvinst’ man hade en dag har förvandlats till en förlust nästa dag.
I can’t guarantee anything with regards to energy prices; I have my superstitions. I can’t guarantee anything about oil prices. I can’t guarantee anything about gold prices. I can guarantee this: the next two years we’re going to experience unbelievable volatility—unbelievable volatility. I believe—to lay my cards out on the table—that we are half or two-thirds of the way through a commodities supercycle. I think we are in a secular bull market; I think the broad economy is in a secular bear market. I think the collision between a secular bull market and a secular bear market is going to resemble the collision of two very large weather systems. And I believe we are in for a period of just absolutely unbelievable turbulence.
In the last couple of months, we have seen 20% or 25% upsurge in precious metals prices. For those of you who are predisposed to believe that precious metals prices were going to go up, this doesn’t feel like volatility to you. It feels like a rational or justified response to your brilliance; believe me, some of this is volatility. For some reason, people aren’t so sanguine about 20% down moves as they were about 20% up moves, but we’re going to get a lot of both of these, and I suspect that over the next two years that 20% moves are going to be considered “tame” moves.
I think we are going to see 30% moves and 40% moves and 50% moves that are attributable solely to volatility, not to underlying events. The underlying events are already baked in the cake. Specifically, I think we’re going to see moves in the junior market up and down of 20% for no reason whatsoever simply because in the near term there are more buyers than there are sellers or more sellers than buyers. I think the probability of 50% moves in both directions—let’s put it differently; I think 50% moves are probable rather than possible.
Now what does this mean for you? Given that volatility is going to occur—in my mind—you have two choices: You can accept it, you can embrace and you can use it or you can get waxed. Those are your two choices. Our theme here has been contrary or victim, the choice is yours, and that’s the way it works with volatility.
What is volatility? Well, in markets, what volatility is is a series of repeated sales. Buying goods on sale is always preferable to buying goods at retail. Volatility will give you precisely the opportunity to do that. Volatility does something else for you, too; it gives you the ability to mark up the goods you bought on sale and sell them to other people for a price that is substantially dearer than the price that you had to pay.
But in order to do that you have to manage your own temperament; you have to be disciplined; you have to pay attention to the reality, not the noise of the market. It’s human nature when you buy a stock for $2 and see it go to $4 that a couple of pleasant circumstances occur. In the first instance, you feel smart; that’s nicer than feeling stupid. In the second instance, when you see it on your statement, you like that stock, it went up, that stock gives you pleasure. It is fighting that instinct that causes you to make money. If a stock goes up, if a stock doubles, for any other than truly spectacular reasons, you need to understand as a consequence of doubling, the stock is precisely half as attractive as before it went up. The fact that it went up makes it less attractive on a going-forward basis. It is dearer, and you have to fight your tendency to like the stock that’s gone up. You have to make yourself take profits.
At the same time, the stock that you liked at $1 falls to $0.50; when you look at that stock on your statement, it makes you feel stupid. It’s more pleasant to feel smart than stupid. Feeling stupid is unpleasant. You see this stock on your statement, which may be a bargain, but to you it’s a dog. It’s a mistake; evidence of your own failings and frailty. Never mind my failings and frailty. Although, if nothing else has changed, it is precisely twice as attractive at $0.50 than it was at a $1. Most people’s temptation will be to sell the stock that’s twice as attractive rather than hold the stock that’s twice as attractive.
The nature of profiting from volatility is being on the other side of the trade. When panic is in the market and good companies are priced down, you have to have the courage not only to stay the trade, but in fact, increase the bet. During periods of time when you are completely sanguine and really aggressive, you need to sort of shake yourself by the throat and say I need to take some profits here. Everybody remembers how bullish they felt in 2006; everybody has to remember that we all confused the bull market for brains, and everybody has to remember how they felt in September, October, November of 2007 when the market went no bid. We didn’t feel so smart then. Had we simply felt a little less smug in 2006 and a little more aggressive in 2007, we would all be substantially wealthier than we are today.
Bear that in mind because this market is going to be extraordinarily turbulent and extraordinarily volatile, and it will give you extraordinary opportunities as a consequence either to make or lose money. Whether you make or lose money will not be a function of the market. Volatility is not a risk; it is a tool. The risk is located east of one of your ears and west of the other. It will be a function of your response to the volatility whether the next two years are extremely pleasant for you or extremely unpleasant for you.