The above is a paraphrase of a translated quote from the Chinese leader talking about US sanctions. The message is beautifully simple and reflects the confidence of modern China. But what can we take from it as investors?
New low cost membership option
As a result of feedback from people who have looked at the site and say they are happy to pay a smaller amount for the more current and focused content that is reserved for members, but who don’t want to pay for the full service with personal access to my thinking on demand, I will now offer a new membership option.
This will cost just GBP20 per month and will permit access to the whole site and the email updates when a new blog post is made. It will also allow commenting on blog posts but so far no-one has used that option!
What it won’t include is the option for more personal service and one to one contact with me that full service subscribers get.
As always I welcome feedback or suggestions on this new offer.
Watching Brief for November (m)
This is now on the site but from now on these updates will appear as blog posts, not pages listed off the man menu.
The new approach should make referencing the article easier and those who subscribe to the blog update service will get an email message saying the latest commentary is available. The article will also appear in the Recent Posts column on the right of the web site and the monthly archive. I hope this makes the process more user friendly.
November 2018 (m)
Going for Gold?
Rules of Thumb
The idea of rules of thumb, or even ‘old wives tales’ is something treated quite seriously by some psychologists. The suggestion is that they have come about on the basis of human experience, so insofar as they reflect maybe millions of observations over maybe thousands of years, they may have considerable merit.
One such rule of thumb for investment markets is that when people are nervous about the value of paper assets, they sell them and buy physical assets. In other words, they sell shares and buy gold, other precious metals, classic cars, Bordeaux wine “en primeur” and so on. Gold is widely recognised as an asset not closely correlated with shares in developed countries.
This is observably true, so I always checked any potentially short term market sell off against the direction of the gold price. If the latter was not moving, it was a fair bet that the sell off was ‘technical’ and just short term reaction to news flow or repositioning by major market participants.
Recently, the price of gold bullion has risen sharply, suggesting a genuine fear is abroad and people are looking to hedge out risk. Readers of my blog post a couple of weeks back will know that I believe is the true situation – market players are now accounting for multiple risks.
So buy gold then?
Well, if only that was easy. Buying funds with the word ‘gold’ in the title may well just get you an exposure to mining companies, but that is just another form of equity share grouping. Buying a gold ETF might work, but check it is one backed by actual physical gold assets. Buying actual bullion in a bonded secure vault is possible using a limited number of third party agents, but of course you have to pay fees. Or you can buy small amounts of gold in the form of sovereigns and so on – but again you will have potentially high trading costs.
Personally, because I know gold is a commodity and it has no income yield, plus potential storage and insurance costs as well as being highly volatile in value at times, I don’t ever use it as an asset class diversifier. Some very well resourced managed portfolio suppliers (7IM, for example) will use gold ETFs for diversification and that is to their credit.
Like that other commodity Bitcoin, I would see gold as an asset for those who can afford to speculate and lose a lot if things go wrong. For the average investor, it is a little too ‘quirky’ an asset to be of much use in portfolio diversification.
New “How to” article added
I have just completed an article expanding earlier comments on how to decide on selling investments to raise cash or “skim’ profits.
Doing this effectively is quite challenging, requiring objective analysis and a fight with your own psychological biases.
At this moment in time, reviewing past profits and changes in your portfolio mix are absolute housekeeping essentials. Don’t delay!
I hope the article is helpful.