I want to take a break this week from our 3 undeniable trends study and address some of your questions.
But before I do, I would like to congratulate everyone who traded SRBL on our Monday alert, as of today we have seen a 23% gain. This was a day trade alert, so please be sure to lock in profits as this trade is highly speculative. We called it a bounce trade, it bounced, now let’s not get greedy.
We will have a new trading idea for you next week that will include a margin of safety. It is in the mining sector, but they don’t mine, they have created a product that is essential to mining. In fact, the U.S. Congress has recently passed legislation making their product mandatory. We plan to profile this company on Monday, we expect to see a good run over the coming weeks as this company receives a lot of attention.
Trend Mail: Q&A
I enjoy your emails and I am excited to learn about making some extra income in your paid members area; but before I do anything with my money, I need to know if I should be selling my gold and silver? This trade has destroyed my wealth as I put almost my entire net worth in silver above $40.
Joe, I am sorry to hear about your investment experience, this is what my friend Marin Katusa called, “a valley of darkness.” You have made a large investment into something based on the fundamentals and now that investment is down significantly, so what should you do…First off, I think having almost your entire net worth in silver is too much if you are sensitive to price swings. If you can, consider putting new money into real estate, a business, or a few high quality stocks outside of the mining sector. To your question of if silver should be sold because it’s now down? In my opinion, no. The fundamental story hasn’t changed at all, in fact it is a lot better. At these prices less silver will be produced, exploration will be put on hold, and the dumb money will flee. So you have stronger fundamentals and a better group of buyers of investment silver.
We all have to consider our own personal circumstances; for myself, I haven’t sold any silver while it has fallen, my average overall cost is about $13 per ounce, however I have purchased silver in the $30’s, high $20’s, and a few times in the past two weeks at about the $20 mark. Silver can go down further, but if you ask me, I think it’s a good buy right now.
Are we headed for a stock market crash?
Highly unlikely since everyone is predicting one, the market rarely cooperates with common sense. The FED is also bluffing in my opinion, if anything these past few weeks were part of a normal long over due correction. Markets are full of fraud because of all the government involvement, however companies will adapt, and good companies will continue to generate revenues, those are the ones you want to own. For example, if you own a medical company that sells syringes, does it really matter to them what Wall St. is or D.C. is doing? Not really, their stock price might move up and down, but the business itself is perfectly sound. Remember, when buying shares you are buying the business. Just as I rarely think about what a rental property is worth, I don’t give it much thought about what my IBM shares are worth. I am happy to own an asset I purchased for a good price and will receive dividends for the rest of my life.
Do you think people should buy life insurance?
I have never owned a policy, I just don’t like the idea of it. However, I plead ignorance on this one, I just haven’t looked into it enough; but my staff is currently reviewing this and I promise to come back to you in a few weeks with a better answer. As of right now, I would prefer to use my money to create more wealth and self-insure my family rather than use extra funds to purchase insurance.
If the middle class is destroyed, won’t this kill stocks?
No because businesses aren’t going away just because 4.5% (U.S. population) of the world is joining the rest of the world in how its economy looks. As the U.S. middle class is destroyed, people in the east will replace those incomes and spending. Even if volume collapses due to the lack of middle class buyers, each company still has real value, and over time that will be reflected in share prices.
Have a great long weekend, look for my new trading idea this weekend!
P.S. Share Disclosure: I am long IBM