How do you get rich? “Buy low and sell high.” That is a wall street adage. It happens to be true. It sounds easy. Few investors do it. Investors love to buy at the top and sell at the bottom. In short, they can not control their emotions. If you are buying the SP500 or Dow, you are not buying low. You are buying stocks that are over valued. I don’t think the bull market in stocks (SP500 & Dow) is over. I own stocks. You can check out the performance tab to see for yourself. I think they will become more expensive.
While you are over there take a look at the worse performers. They are the resource shares. If you were to take them away you would have an open profit of 10.6% in the stock portfolio. They have gotten cheaper. This is typical when you buy depressed stocks. They tend to get cheaper. They tend to stay cheaper a lot longer than can be imagined. So how cheap are they?
Above is the HUI to Gold ratio. The resource/mining shares have not been this cheap since 2001 relative to gold. This is called “buying low”. How will you know when you should sell? Easy. Flip the chart.
This is called “selling high.”
Let me tell you what FNV did in 2017:
1) $675 million in revenue- a new record and a 10.6% increase year-over-year.
2) $516.1 million adjusted EBITDA- a new record.
3) $194.7 million of net income- a new record.
Most investors will wait until the resource shares get expensive. They will go higher and higher. Than, at the top, they will want to buy. This never ceases to amaze me.