08-13-2011, 05:26 PM
|
|
|
Confirmed User
Join Date: Jun 2010
Posts: 349
|
How to Profit From the Next Investing Bubble
Interesting article 
Quote:
Richard Ross is resisting the urge to say it, so we'll say it for him. He told you so.
Ross works at the brokerage firm Auerbach Grayson as a "global technical strategist" -- Wall Street jargon for someone who looks at trading patterns and tells clients which investments are good (or bad) bets. With assets of all kinds having soared of late, everything seemed a little pricey to Ross. But one investment in particular caught his eye: silver. Fueled by inflation fears, the metal's price had shot up 170 percent in less than a year; it was rapidly approaching $50 per troy ounce, a price not seen since right before Ronald Reagan's first term. "It's a classic bubble," Ross thought. So late last spring Ross released a research report titled "Silver: Taking Our Chips off the Table."
Two memorable things happened after Ross issued his report. First, he got an e-mail the next day from a reader, with the subject heading "Richard Ross the Dumb---!" Second: Over a two-week stretch starting just after his report came out, the price of silver plummeted almost 30 percent.
You'd think all investors over the age of 25 would, by now, have had the concept of bubbles seared into their brains. Those who didn't get zapped in the tech-stock meltdown almost certainly lost a few layers of skin in the U.S. real estate bubble and the crisis that followed. But it turns out, even painful crashes haven't stopped buyers from driving other assets into bubble land -- at least if you use bubble to describe investments whose prices are higher than fundamentals like supply and demand dictate they should be. And startlingly, some observers say bubbles are forming with more frequency than ever. The $108 billion investment-management firm GMO says an asset reaches bubble territory only when its price far exceeds the historical average. This happens to a typical asset once every 30 years, but the past decade or so has been unusually bubble-rich, with a new one appearing every three or four years. "They occur in bunches, and recently there have been more," says Jeremy Grantham, GMO's chief investment strategist.
.....
Gold
Of all the assets wearing the bubble label, gold is probably the best known, and not just because TV commercials for Krugerrands have been omnipresent since the financial crisis erupted. Many analysts believe gold's meteoric rise, from barely $250 an ounce in 1999 to around $1,650 today, is based mostly on an irrational sentiment -- the belief that gold will retain its value if inflation soars and currencies plunge. "Clients have been calling up asking how to invest" in the metal, says Bob Jergovic, chief investment officer of $7 billion money manager CLS Investments. "That's not a good sign."
|
http://www.smartmoney.com/invest/str...1312401852114/ |
|
|