 One of The Little People
Speaks Up
Michael Wheelock
May 4, 2005
It's time for one of the "Little People" [see BWP] to speak up about
gold and gold stocks. I'm not exactly new to investing: I rode
the Gold Bull in the 70's and did incredibly well. I only listened
to two of the "Golden Geezers" in those days but that
was enough. Then one morning in January 1980 I watched bullion
spike into the mid-$800's and knew that we had seen the
top. How did I know? Intuition told me that trees don't grow
to the sky.
The 2001 Gold Bull produced totally different results for me.
The main reason why is because I read everything gold-related
that I could get my hands on. That was my first mistake. My second
mistake was to believe it. I stayed out of bullion last summer
because a certain advisor stated rather eloquently that bullion
was going down. Instead it went up. I stayed in gold after it
formed a double top last spring because a certain advisor said
that bullion was going to $480 or else he'd stop publishing his
free daily gold commentary. I held a certain blue chip gold stock
that went nowhere for two and a half years while bullion went
up 35% because a certain investment letter that I actually paid
for advised us to. The same advisor was bullish on gold -- especially
at the top -- but recently suggested that his readers should
sell.
Bullion would have to double from these levels to compensate
for all the money I have lost by following so many advisors.
But education costs money. Tuition is super-expensive. It's been
worth losing money because I've finally re-learned how
to trade the market. Not just the gold market but any market.
And here's what I've learned.
1. Our system may appear to be dysfunctional to some but it certainly
is resilient. Despite all our faults we may last a great deal
longer than many gold bugs think.
2. There's only one market. Every security behaves the same way.
Buying when the blood is running in the streets and selling when
you want to marry your investments is the only trading strategy
that works consistently. Special pleading, dynamite fundamentals,
and even mathematics do not change the laws of market
physics. Terror and lust for money create the extremes that generate
profits for those with daring.
3. Surrendering your seniority to an advisor - or anyone - because
you think they are smart will cost you plenty. Advisors are people
just like you and I. They make mistakes and are burdened with
the need to be right and keep the cash flowing in. If you listen
to other people you may not listen to yourself. The only weapon
you have in the market is your own intuition. If you surrender
your ability to know people will take your money consistently.
4. If you stop using your time depending on other people's
comments and chart interpretations, and use that time to stare
at the charts you will develop your own opinions. Your own opinions
can make you rich. Everyone has something to sell you or something
to give you so that they can be right. Their opinions cloud your
mind and prevent you from having your own thoughts. Can you concentrate
in a room full of screaming people? I can't, so I have learned
to protect myself and get my own information by shutting out
as much input as possible. My bottom line developed an uptrend
when I made that decision.
The current gold stock crash is no different from any other smash.
When the blood is running in the streets, and panic rules, the
bottom will come in. When investors sell stocks at any cost and
throw value out the window it will be time to buy gold stocks
again. How did I find that out? By ignoring everyone's opinion
and watching the markets as they undulate through cycles that
are as ancient as human society itself.
I hope that I don't run into too many of you at the bottom!
Michael Wheelock
email: mickhum@yahoo.com
321gold Inc
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