Contrarian Stock Market Investing News - Featuring Bargain Stocks » Investors

Time to dump gold?

Ian Mathias — Thu, 05 Nov 2009 11:42:23 +0000

Gold gained yet another powerful ally yesterday — hedge fund icon Paul Tudor Jones. The man who famously called Black Monday in 1987 and the Nikkei crash a few years later now thinks “gold appears to be cheap.” In a note to his investors, Tudor said, “I have never been a gold bug. It is just an asset that, like everything else in life, has its time and place. And now is that time… gold’s value should increase as its scarcity relative to printed currencies increases.”

So gold is now publicly loved by armchair investors, famous hedge fund managers and central banks… even as we write, Erin Burnett is “squawking” about it on CNBC. Are your contrarian senses tingling yet?

“So many hedge fund managers and pundits are singing the same tune: long gold and short U.S. Treasuries,” our friend Dan Denning wrote in today’s Daily Reckoning. “The bond bubble could go on much longer than anyone expects. And when so many people agree on something, none of them are usually right. As a contrarian, you’d be worried about becoming a victim right about now.”

Finish reading this article on DailyReckoning.com.

Don’t Get Caught In the Crowd

Charles Delvalle — Wed, 28 May 2008 14:26:55 +0000

You see it all the time; a stock jumps 20-30% in just a few days. Suddenly, the average investor sees what is happening and decides to join the bandwagon, hoping to catch some of the move. After jumping in, the stock comes down 15% and the investor is at a loss.

This type of loss is one of the most common mistakes investors make, but is also one of the easiest to avoid. Take a look at the chart below to see what the situation looks like.

This is a chart of Sirius Satellite Radio (SIRI). In 2006, they were on a steady downtrend but rallied to move through their 20 and 50-day moving averages in June. In just 4-5 days, Sirius went up nearly 20%. This was simply too far, too fast and here’s why:

The Slow Stochastic and RSI indicators show you how much momentum any given stock has moving up or down. When both of these indicators show extreme conditions (readings above 80 or below 20), they signal a potential reversal of the trend.

In this case, the Slow Stochastic was above 80 and the RSI was near that point as well, meaning the stock was overbought and a reversal should follow. If you followed these indicators, you’d wait to buy stock since you’d know that there was a good chance that the stock would go down in value after you bought.

By using these indicators before you buy a stock, you’ll consistently pay less per share and see profits sooner.

Good trading,

Charles

Source: Don’t Get Caught In the Crowd

US Stocks Rally at Open

Contrarian Profits — Tue, 01 Apr 2008 14:49:02 +0000

Mr Market kicked off the second quarter with a rally, extending gains into a second day. The upswing comes after heavy writedowns by Swiss bank UBS and data showing confidence among manufacturers at a four-year low.

Read on at Dow Jones MarketWatch.

“No matter what you think, now is the time to buy,” says value investor Chris Mayer.

“At the beginning of recessions, investors tend to continue buying the stocks that were acting well when the economy was growing. That means momentum stocks, or stocks that have gone up. But as you get into the recession, people start to think about valuation again. Momentum stuff starts to not make sense.”