Financial Advice From Man Who Made $1+ Billion in 1929 – Importance Of Being Patient and “Sitting”

Wednesday, September 27, 2017
By Paul Martin

By: Mark O’Byrne
GoldSeek.com
Wednesday, 27 September 2017

– Listen to Jesse Livermore and ignore the noise of short term market movements, central bank waffle and daily headlines
– Stock and bond markets are overvalued but continue to climb… for now
– What goes up must come down and investors should diversify and rebalance portfolios despite market noise
– Behavioural biases currently drive markets, prompting legendary investors to be confused and opt out
– Lesson is to prepare portfolios for long-term and invest in assets that will act as hedge in next market correction or crash
– Gold performs well over the long-term and delivers to those “sitting” and being patient

When it comes to your investment portfolio it is harder than ever to sift through market and central bank noise and focus on the fundamental drivers and long-term strategy.

Take for example a quick glance at financial news pages this morning:

A story about bitcoin’s rise from $200 in 2013 to $5000 just three weeks ago – a gain of 2,400%
Fed rate hike odds in December have soared to 78% thanks to Yellen’s “noisy” comments yesterday
Luxury homes in London’s best neighborhoods are set to rise by 20.3% over next five years – allegedly
Warnings of supply gap in oil production next year
Meanwhile, we look at more quiet, conservative gold and it has varied no more than $200/oz over the last four years.

It can be difficult to correlate this with a background of markets that are teeming with behavioural biases. Market reactions are short-tempered thanks to this age of instant information… and disinformation.

Greed and fear become more exaggerated than ever and greed is currently dominant.

The most recent individual to get frustrated with this state of affairs is money manager Hugh Hendry. Hendry recently decided to close his hedge fund, after 15 years. Hendry joined the likes of Eric Mindich, Leland Lim and John Burbank all of whom have shuttered hedge funds this year.

Market frustrations make us want to jump on money making bandwagon

In his round of send-offs Hendry explained how frustrating he had found markets. By nearly every measure they are over-priced, but few seem to care.

Hendry told Bloomberg:

“To my great, great, great horror, I became deeply correlated to the travails of President Trump’s presidency and of course these geopolitical events, which were sparked off in the Korean peninsula.”

Markets are reacting to short-termisms and click-bait headlines.

Consider this: stocks, bonds and property prices are at all-time highs. They’re not alone, private equity and some collectibles (considered alternative assets) are also at all time highs.

But they keep on going.

Occasionally it can feel as though nothing will take the steam out of the sails of markets which by all measures should be dramatically faltering.

Momentum is a powerful thing … especially in the short term.

At the end of H1 2017 the S&P500, the Dow and Nasdaq Composite posted their biggest gains in recent years.

Stock prices fluctuate on a daily, monthly and even quarterly basis. These fluctuations often have very little to do with the fundamental value of the business.

Short-termism, speculation and stock buy backs are the main drivers of stocks today.

In 1960 the average period for holding a NYSE stock was eight years and four months. Today, according to Credit Suisse, the average period for holding a stock across the broader US stock market is four months.

We know from experience that this kind of trading behaviour and pricing activity cannot continue.

What goes up must come down. But obviously no-one knows when.

This is frustrating in this day and age. At a time when information is at my fingertips it can be infuriating to not have an answer.

But, we must be patient.

Importance of patience – a time-old skill

The Rest…HERE

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