“And”, she continued, “it is the same with clothes. They have fashion seasons and every fashion season is shorter so they encourage you to add to your wardrobe more often. All this marketing – for what?”

My wife is not a shopper, so this was not a hint to buy clothes, for sure. I thought about what she was saying and realised that she was onto something. Something to do with the world we live in.

Investing in Indian stock markets: a fashion?

Let’s take the field of investments: investing in the Indian stock markets. Why is it that we cannot sit patiently with a few stocks and watch them evolve over a ten or twenty year time horizon? Maybe make some changes to some of the stocks we own in our portfolios every 5 years or so. Sure, if a really new idea comes along, and you like the stock of the company involved in that business, go ahead and add it to your portfolio. But, generally, if you did your homework well before you invested in a stock owning the stock for a long time could work well.

But the system won’t let you. The system – the financial system geared up to service the investor – is not built on a “let the client buy only once” strategy. The financial system is geared to help you make profitable investments in the Indian stock markets by investing in a list of Indian stocks or Indian mutual funds.

And then help you change your mind the next day about what you should really do to make profitable investments by giving you a new list of Indian stocks and Indian mutual funds. And then help you change your mind again before the week is over.

For each time the system helps you change your mind, that creates an action: the selling of one stock and the buying of another. Or the selling of one mutual fund and the buying of another mutual fund. They are making you buy what is “fashionable”.

Your investment portfolio for the Indian stock market is your fashion statement. Just like owning the CD of the newest song. Or owning the latest style of shoes or clothing.

So, when you go to a party to meet the parents of your daughter’s school friends, you can discuss the latest fashion statement in investing.

Investing in Indian stock markets: or in your broker’s wealth.

You are not really investing in the Indian stock market anymore. You are investing in the wealth creation for the people in the system. Every time you trade, you generate a revenue stream for your broker. You may have a loss or a profit on your latest, fashionable trade. That is your problem. They have a guaranteed profit.

Come to think of it, there are two rules to be happy and successful:
Rule # 1: say “yes, dear” to your wife and nod your head in agreement.
Rule # 2: say, “no, thank you” to your broker and do not nod your head in agreement.

Most people seem to treat their broker as their wife – and nod in agreement to everything they say. And they seem to treat their wife as if she were a broker – and do not listen to their views.  A recipe for disaster: emotionally and financially.

Platinum bottomed at $1840 then moved upward in two sharp steps on the Nymex, ending at its intraday high of $1900/oz., up $35. For the week, platinum was down 2.9%.

Silver pushed to a high point of $16.50 at the noon hour, but eased in the afternoon hours to close at $16.37, up 22 cents. For the week, silver lost 2.8%.
(Click here for charts)

Though it was a day of rather modest gains, anything was better than the pounding the precious metals absorbed on Thursday. That gold quickly recovered from a dip under $850, and that silver held comfortably over $16 for the whole day, is certainly, while not confirmatory that the metals have bottomed, encouraging that that might be the case.

In addition, gold moved against a rising dollar, although it was supported by sharply higher crude prices.

The Hightower Report wrote of the ongoing tension in the market thusly: “While it might take a little longer to transition the bull camp in the gold market back to a classic inflation posture, from the recent flight to quality argument, it is difficult to suggest that a recovery in the US economy will be a long term bearish development for the gold market.

Certainly a host of buyers over the last year have banked on a persistent decline in the Dollar and in turn piled into gold. Certainly seeing fears of a historic financial debacle in the US added to the bull camp and therefore seeing the threat of a debacle in the US decline is naturally cause for a wave of long liquidation in gold.

However, as was seen in the early action Friday morning, gold can rise in the face of residual Dollar strength and gold can also re-embrace the ongoing potentially historic inflationary threat that could unfold in the event that the US economy gets back on track. In short, the gold market appears to be facing a tug of war between an exodus of flight to quality longs and a possible influx of fresh buyers off a rekindling of classical inflation prospects.”

James Moore, of TheBullionDesk.com remains cautious, writing that, “We still see gold remaining under pressure in the short term, with a substantial break below $850 potentially triggering a move back to technical support located around $836.75.”

Ned Schmidt, editor of the Value View Gold Report wrote that there’s “little doubt that recession is now the situation in both the U.S. and Canada,” and consequently “That reality has broken the short-term euphoria that had been chasing returns in real assets, from oil to gold to agri-food commodities … With a recession mentality now in place, commodities are being sold …”