Boy, negative article. He says gold stocks are expensive, short selling is not the answer, bargains are hard to come by, and cash is way under-rated. He does say gold stocks will likely go up though. We need more articles like this to finally cause capitulation. Thanks for posting Vet, all should read this. I do like his shot at Abbey. She made one good call and has been wrong for years.
****
"Myth No. 6: This is a market for stock pickers. After all, people have to invest in something, and sector rotation can benefit your portfolio. This is classic Wall Street churn-burn; they churn you get burned. Fact is, since the Jan. 14 Dow peak this year, 60 percent of all American stocks are in the red, according to Standard & Poor's Compustat database. This year alone, the entire stock market, as measured by the Wilshire 5000 Index, has lost more than $1.5 trillion of wealth for investors.
Myth No. 7: I'll just short-sell the market, or buy put options as insurance against the downdraft. That's what hedge funds do for a living, not individuals. There's nothing wrong with short-selling stocks, but you have to be prepared for the long haul to really make money. Short sales are expensive; they require margin interest of 8 percent or more. Plus, the short seller pays the dividends on the stock. Hedge funds hold their short-sale positions for years, not months, and spend 10 hours a day on the telephone, monitoring those positions. As for options contracts, one in five investors probably make money on equity options.
Myth No. 8.: Gold mining stocks are expensive. Actually, this one is true. Gold mining shares such as Newmont Mining (NEM: news, chart, profile), the world's largest, are selling for 13 times cash flow. But as we said, it's all a moving target. Gold stocks will get even more expensive, fabulously more expensive, as the stock-market and U.S. dollar declines become part-and parcel of everyday life. Every $10 rise in the gold price is like rocket fuel to gold miners' profit margins. With the price of spot gold flirting with the $330 level, mining equities are poised to retain their status as this year's biggest stock market gainers.
Myth No. 9: Holding cash amounts to lost opportunity. All I can say to that is, forget the glory days and stop trying to forecast the future. Cash is way under-rated these days. It still pays the bills. Recipe for success: put all of your retirement cash in a basic money-market account, let it sit for 20 years, sleep like a baby. When you wake up, take that Caribbean cruise, first-class berth, please. |
