Fleck's Thoughts

A reader was kind enough to send in a collection of his favorite "thoughts" from Bill, which are reproduced here.

Hope is a terrible investment strategy (8/29/01).

Yes, I think it will happen again, but the real opportunity was 1981-1982. The "hope being a bad strategy" refers to AFTER you take a position, we can all hope for lots of things, but we shouldn't invest money on that basis.

It's very important to have conviction in the investment business as the market is always trying to trick you. Of course, you also have to be flexible enough to say that you might be wrong - at least when it comes to timing (when you are speculating). It's also important to learn how to manage your own psychology, so you don't help defeat yourself. We all have weaknesses we need to manage around.

To be successful at speculating or investing, one needs conviction (though one has to learn to be flexible as well -- a tricky combination), and I would currently have none if I were attempting to outguess what I think the other guessers are liable to guess. Thus, if the stock market wants to trade higher, it can do so without me. Besides, I've got my hands full with my money printing ideas -- where I have plenty of conviction (plus exposure), and I can endure (though not cheerfully) the bone-jarring corrections that are what we must deal with.

Human emotions are always the worst right when the market is ready to turn...both directions. Important highs and lows are created by EMOTIONAL reactions to what has been taking place...not due to some rational analysis. It's why the ends of moves are always so wild.

And FWIW, every move in a market doesn't mean something, lots of times it's just noise.

The patience required in investing is not so much the patience sitting with a position after you establish it, but the willingness to be patient before you establish it.

"You have to take the market down to where it will trade." It means you have a stock you own a bunch of and you can't sell it (but want out) because it isn't trading. You need to drop offers down to where the buyers (i.e., volume) are, then you can take your loss and move on. That is the entire USA housing market, prices need to drop to where they can clear the market and find buyers.

Sure, I get bored all the time.  There are many, many days when I do nothing at all. Then occasionally like this week I get active as a few things set up. Sitting on your hands is not only OK, it's critical to do so when you don't have great ideas, or as you wait for events to play out.

Don’t let market action make you impatient.

All paper currencies CAN decline against goods and services (or gold, Monet's, etc.) if they print enough of them. On a relative basis some will win vs. others. So, you can look for the winners of the paper race, to the bottom, or look for ideas like gold, silver, etc. that win in absolute terms.

I have said for years that I do not think we will see hyperinflation. It may come to that, but it isn't my belief at this time. However, what protects you from inflation will protect you from hyperinflation as well, which is gold.

The best thing to do when you know you have been wrong is to start some action (this is what I try to do), thus buying a bit of gold or covering a short. Depending on how you’ve been wrong changes how you look at the situation. Even if you just take a tiny bit of action you will feel differently. Doing nothing just reinforces what you have already done or not done.

Being prepared for volatility does strengthen one's resolve.

When we face life's difficulties, quite often they are not as bad as we think they are.

I have the perfect Chinese investment. Gold. It's what they themselves are buying.