Recently I read the following comment on a post about investing in Gold:
Isn’t buying Gold today just like buying a horse ?
It being a purely romantic move for an object with no current use.
Sure it looks pretty and it will still get you there, though slowly,
but why would anyone have it as their primary source of investment travel ?
And I got to thinking that maybe comments like that are the “Bell” that rings indicating a new buying opportunity is at hand. In response I wrote an article entitled, Where’s Gold Headed Today? At the time of the comment, Gold had just finished trading at $1050 and by the time I wrote the article, gold was trading at $1100. As of this writing gold is trading at $1220. So it appears that the commentor made it statement at the precise bottom. But then gold tends to be an “emotional” investment with crazy statements at both the bottom and top. Personally, I think these outlandish comments are more reliable if they come from the general public rather than from seasoned investors.
I remember attending a seminar for computer network professionals in early 2000 and during every break all they could talk about was how they were going to retire on their 401k stock gains which exceeded their salaries. There’s an old saying that “It’s time to sell when the bag boy at the grocery store is giving you stock tips”. Although these guys weren’t “bag boys” they certainly weren’t investing pros either.
In the following article Chris Ciovacco gives us a different perspective about market sentiment… and gives us this excellent reminder… “Sentiment, like many pieces of evidence can be helpful, but like anything else it should not be used in isolation.” ~Tim McMahon, editor