My two cents worth Grov - You say goldies have turned in line with the index, I say they may have turned in line but they have far outperformed. The majors are up 100% off their lows, the XJO less than 20%. I remember a number of people commenting over the years that babies went out with the bathwater in the crash of 32 (?), then gold stocks clearly decoupled the index for anumber of years. I have little doubt the same will occur. They are a sector of the market where fundamentals have actually improved. Not deteriorated or stayed the same but actually improved. Price for produce rising (AUD) and costs declining. VERY few sectors have similar fundamentals. Investment money is ALWAYS looking for a home. Lower interest rates forces savings to take on increased risk in an attempt to provide a return equal to or above inflation (I know your queries re inflation/deflation, but thats for another post). Very few sectors offer not only unimpaired fundamentals, but improved ones.
As you also rightly say, the market has fully ignored fundamentals recently, and I guess this is the basis of forced deleveraging. It doesn't matter what the fundamentals are, cash is needed, NOW! This can not and will not go on forever. In fact I'm very confident the acute phase has passed.
Lastly, you make a VERY correct comment. Buy and Hold WILL NOT WORK as a general strategy over the next few years if you have the standard diversified portfolio. May work in a few sectors like gold and energy, but for the next year or two even it will be a traders market. The index's will probably fluctuate for very little net gain over the next year or two. It is time to trade.
I am not sure if you have ever read Bill Cara's blog (billcara.com). Bill is a lighthouse in very rough seas. An insider who thinks like an outsider. Don't for a second think he is another financial commentator plying his trade. Do yourself a huge favour and read his commentary every morning (night time here). You will be far wiser for it. He has been commenting for a while that the buy and hold model is now broken.
I plan to do what I mention in the first post on this thread in the very near future. Am moving house at the moment, so it won't be until at least this coming Monday maybe a bit later. Hope we can all help each other to take some good money out of the gold bull by trading a bit more actively.
