25 August 2006

Psychology and investing

Some recent "mistakes" have led to fresh doubts about my fundamental analysis of the economy and my strategy.

These are of course short term and specific mistakes (meaning specific stocks), so they should not divert me from my long-term strategy (which is actually not so long-term, but more over a few months.)
Basically the goal is to find the kind of trend that has given me the kind of returns I had from January to April.

Right now there is not really a confirmed trend for a 3-6 months horizon.
The stocks are in a range , the gold trend is in a range, and the EUR/USD is in a range as well.

These three assets should go up in the medium term, especially if they break some major obstacles.

Actually of these three asset classes, gold in $ as a way to go, but might most probably go down within a few months.

EURUSD is the one that is closest to the resistance, and if and when it breaks will be a huge signal, that might give the direction to the other markets.

In the mean time, we can stay bullish on stocks who don't have a resistance in the short term and sit on our hands about gold.

Actually it might be reasonnable to stick also with the gold mine stock , since it seems to have found a floor and is going up relative to the gold price.

When the EUR/USD breaks its resistance, I can focus on shorting european stocks and buying gold calls and eurusd calls.

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