Have you thought of a
good way to rate your analyst? There are currently over 300 financial
analysts on the various financial websites, ready to share their wisdom with
you and help you decide whether to buy, hold or sell.
From letters I have
received I can conclude that some of you read everything that anyone is posting
on these websites. That’s a lot of reading! There has to be a better
way - and there is a better way.
The only tool you need
is a spreadsheet, or a notepad. Whenever you read someone’s analysis
covering the sector of the market that you are interested in, mark down the
specific predictions and expectations that this analyst puts in front of you,
especially where dates and prices are supplied. Build up a file on each of
the analysts that you now follow. Most financial websites compile an archive
of all of the articles published. Go back and read what he or she said in
recent months. This is a good way to find out what a particular analyst
predicted or concluded in the past. Then be sure and mark it down.
After a while put a red
“X” on the page of any analyst who was wrong about a prediction
50% of the time or more. Especially mark down any major blunders. Before too
long by selecting the prescient analysts and deleting the rest, you will end
up with the ‘cream of the crop,’ and your investment decisions will
no longer be made in bewilderment, due to the many conflicting bits of advice
that you are currently subjecting yourself to, if you are not being
Best of all, you will
spend less time in front of the computer, and more time on the beach.
It is our custom to
always include at least one chart in our essays, and for today we have
selected two charts. The first is the index that compares gold to the 30 year
(Chart courtesy Stockcharts.com)
Since late 2002 the
trend turned decidedly in favor of gold. The green arrow points to the time
when the 50 week moving average rose above the 200 week moving average for
‘positive divergence’ that is ongoing today. Ever since that day
it made sense to sell bonds and put the money into gold.
The blue arrow points
to the resistance level that has held up the advance since early 2008. Now
that gold is rising above $1,000.00 an ounce it is only a matter of time till
this index breaks out at 8.5. This will cause many more people to dump bonds
and buy gold. At the bottom of the chart we see how closely the trend in the
index is tied to the gold price itself.
The most bullish
development for gold and silver bulls is the knowledge that China is interested
in converting some of its huge stash of US dollars into gold and
silver. They cannot rush in and buy large quantities because this would
drive the price up too high. They have to be content to ‘buy the
dips’. This puts a floor under both gold and silver and reduces the
threat of commercial traders and bullion banks forcing the price drastically
lower, as they were able to do in the past. If gold and silver prices
were manipulated downward in the past, the end result will be that they will
then rise higher than they would otherwise have risen. This is because
low prices discourage new production. It takes high prices to entice
people to invest in new production. In the case of gold and silver it takes a
lot of money and a lot of time before gold and silver can be discovered and
brought above ground.
courtesy Federal Reserve Bank of St. Louis.
As the chart clearly
shows, the printing presses are still working at full speed. Nothing like
this amount of currency degradation has ever happened in the USA on this
scale before. As long as the rate of mortgage foreclosures remains high,
along with a rising unemployment rate, we can count on the Federal Reserve to
‘keep on printing.’
Note: At my website www.pdegraaf.com we are delighted with the
popularity of the two latest features:
stock pick of the week.
#2 my expectations for the future.
Come and visit at your
“The opinions of
ten thousand men are of no value, if none of them know anything about the
subject.” Marcus Aurelius, Roman Emperor from 161 – 180 AD.
by Peter Degraaf
Peter Degraaf is
an on-line stock trader with over 50 years of investing experience. He sends
out a weekly Email to his subscribers. For a 60 day free trial, contact
him at email@example.com, or
visit his website www.pdegraaf.com.