This question just came in;
Like to know your reasoning for even staying with GLD if you think gold is topping out?
I will always maintain exposure to gold because it serves as a counter strategy to stocks. Its low correlation to equities reduces overall portfolio volatility. If something truly bad happens in the world, gold will likely go up so I want some exposure. I have merely altered that exposure.
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3 comments:
Interesting trade, I will be watching how this works for you. I am considering doing a similar trade, but have been using physical gold and silver to replace the mining stocks I sell. Long term the hard metal might be more liquid than a currency gone bad. " a bushel basket of a hyper-inflated dollar might not be worth an oz of gold"
Hi Roger,
I am not sure this is the place to pose this question but I was shocked to see S&P 500 returned 17% /per year for the past three years. Lacking of any terms to use I would use the phrase "performance warp" for this warped performance figure.
My question is "how do you look at the performance numbers without being misled into buying it?" My pea brain is telling me if a stock or fund had a bad year, the future performance tends to appear to be outsized compared to some real good investment which is steadier and consistent. I appreciate your comment on this.
17% per year?
That reminds me of a quote from Robert Reich (spelling?). "If you take me and Shaquille O'neal we average 6 feet tall." His point was about distorted data.
Most of the last three years' lift came in 2003.
I'm not sure I follow the rest of your question. In constructing a portfolio you should have all (or many bases covered. If you are diverisified you should some things that did well before and did poorly before.
This year some of what you own should do well and some not. Hopefully more does well than does poorly.
If every thing does well or everything does poorly you are not diversified. If you are not diversified you have a lot more riding on you being right.
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