This is an interesting interview and it is worth some
comments for our education
I had heard Peter personally in Vancouver about 2 years ago.
Peter is a very articulate, charming, eloquent, convincingly, humorous, and
assertive speaker.
However, what he is doing is actually dangerous for
investor. He holds the same views as a
number of commentators and economists like Michael Pento, Marc Faber, Peter Grandich, Doug Casey. They are
all bullish on gold and silver; bearish
on the market, bearish on Treasury and very bearish on US dollars.. These are the gold
bugs, conspirator theorists, dollar bears and Fed hater. Their predictions
were terribly wrong for the last 4 years. Everything is moving in opposite directions to
what they predicted.
I do not see how you can make money when you missed one of
the biggest bull markets in the last 4 years. The dollar and treasury have gone all time high and gold collapse 70% from
the peak.
There are important lessons that can be learned from what
happened.
First the market has a way to inflict maximum pain. It will
move violently and causing the the maximum number of people to lose money.
Sir John Templeton” The market can stay irrational longer than you
can stay solvent.”
Fundamentally, they could be right. I believe gold and silver will go up
eventually. I believe the easy monetary policies globally will cause a catastrophe longer term and I am actually frightened to think of how it will end. But by the
time the fundamentals catch up with the market probably in a few years, you
will probably have lost all your capital. This is how many hedge funds blew up
from time to time.
Peter Schiff came with an
emotional baggage. His father had a unpleasant history with the Fed and the
government. You can read it on http://en.wikipedia.org/wiki/Irwin_Schiff. His strong views probably have to do with
what happened to his dad. Carrying this baggage into your trading is not going
to work out well.
Trading or investing or speculating or gambling
– whatever you call it has to deal with uncertainty. Even though one may have
certain sets of conviction, one needs to be ready to acknowledge being wrong at
least for the short term. But stubbornly clinging to your set of beliefs will
eventually end up in disaster. As with gold bugs, when the price goes down,
they blame in on manipulation by Fed and big banks. They will still find
reasons to justify why gold will go up to the moon. When challenged about his
prediction 2 years ago, he started to bring up how he was right in predicting
the credit crisis. I think the easiest to lose success is to become convinced
that you are successful.
.A trade or even an investment has built in
volatility and risk. A good investor never believes in absolute certainty. A
successful investor manages volatility and change. Never fall in love with your views and ideas.
There will be mistakes, losses and you will be wrong from time to time. The
market has a way to keep you humble
The market is inherently uncertain. Any trade needs to start with a clear plan. The
plan manages possible scenarios and losses, not to predict the future and profits.
Control you losses is one of the most important keys to a
successful trader. Learning how NOT to lose money is more important that how to
make money.
Finally, one of the cardinal rules of trading is “The trend
is your friend”. Do no fight the trend. Technical signal trumps fundamental for
the short term. Be patient and wait for confirmation of price action to
fundamental directions before jumping in.
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