Set your investment clock ahead as Dawn’s new stock market winners

The investment world is good at making their favorite bricks that will be “sure winners” just as they shrink and collapse. April and October are in high demand for old die moves and new ones starting.

Trend changes often involve 180-degree rounds, not only in the previous positive and weak investments, but also in investors ’thought processes (a combination of reasoning and sentimentality).

So how do we put our investment clocks forward now?

First, by realizing that the prevailing beliefs attached to winning ideas are no more than they were. The key achievement is that past performance is meaningless in determining expectations. Instead, the idea should be a warmth of high performance in the past based on enthusiastic views.

Note: This magazine captures investors ’bizarre response to high-flying players: A higher level of assurance that more is yet to come. The correct view is that big benefits can mean more risk

Second, by looking to the future with reasonable expectations and common sense

Third, by looking at the past “non-winners” as future winners. No investment method lasts forever, and it is often the declining investments in one period that move forward in the next. (This view is a source of “contrarian” investment that offers good returns with reasonable risk.)

The current example

The media happily reports on the stock market making new heights practically every day. However, compared to the ruckus in the fourth circus ring, the market action looks invisible. (See “Emerging Professionals in the Stock Market – Don’t Worry” for a look at the fourth “trick” ring in the stock market.)

The “craziness” in the fourth ring is beneficial because the actions there make the beliefs overwritten. And those credits are wrapped up in three deposits: GameStop

GME
, Tesla

TSLA
and Bitcoin. This graph shows the cumulative performance from just before the pandemic struck (January 1, 2020) through Friday, March 12, 2021.

There is no argument with these results. Everyone would be very happy to win the benefits of the pay lottery. Note that a good 24% market share is hardly to be seen compared to these barn burners and others like them. And that’s why so many investors have grazed toward the day-for-wealth trading method of investing. What is unknown is how many of them are burned.

Misunderstanding of the game without sum

From time to time, we read about how the stock market is a game without sum. This is a misconception because valuation stock prices are based on company fundamentals and forecasts. They can rise and fall independently of demand and supply volume. A common example is during an employment reporting period. Results are released when the market is closed, and any unexpected exposures appear as a “gap” between the previous closure and the next opening. So, if that’s progressive, all a shareholder is a winner.

However, that does not apply to a gambling game. And that’s what GameStop-type stocks have grown. Valuation is not relevant because investors are trying to get out of each other, buying low and selling high. Obviously, there is someone on the other side of those trades, so the label doesn’t matter.

But there is a much worse issue: Zero-sum does not mean that gains and losses are shared fairly. That’s because Wall Street traders are active, with plenty of money, advanced experience and natural savings in gaming. They even strengthen their skills of trading against each other. So when a boat of newbies goes off on the floor of the trading room, they are pretty good. Yes, there are media stories about a few winners, but there are thousands of losers who don’t want to talk about it.

So…

Ultimately, fundamentals win out, as do Wall Street traders. That leaves many (mostly?) High and dry investment traders. More importantly, it will leave those “meme” stocks in the tank.

So, turn to reality in the future and examine those who have not won “people who have not won” in the past. They could be hidden gems, which is where Barrick Gold comes into the picture:

Barrick Gold – A potential winner for tomorrow

So what about the 11% Barrick Gold yield? Why is it even on this graph?

It is there, not because of what it has done, but because of what it could do. There are four reasons to consider this exciting investment:

First, inflation rises (more definitely, “fiat money inflation”). Significant expansion of money supply relative to the economy plus the recent expansion of bank loans will again stimulate economic growth and price levels.

Second, gold will become popular again when two scenarios occur: Inflation rising and the price of gold rising

Third, Barrick Gold, as a company, can deliver additional employment growth beyond the rise in gold prices through strong industry regulation.

Fourth, as discussed above, gold has lost its luster in the recent investment period. Thus, it has the potential to play catch as investors return.

Baseline: Now is the time to develop a new investment strategy

The real gyrations and popular news accounts mean it’s time to avoid the popular, fast-paced investments. Instead, refocus on less exciting but more fundamental investments.