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Fleck's Thoughts

Fleck's Thoughts

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

  • VIX doesn't = risk, it equals volatility, which is a warning sign about potential moves that can trigger real losses (which is what risk really is - losing money).
  • Trump isn't Reagan. It was Volcker that was bad for gold, i.e., sound monetary policy. THAT is unlikely to happen anytime soon. It would drive rates so high as to cause the budget deficit to explode and the economy to implode.
  • I don't touch my core position. That's why it is called "core." I have positions I trade that I definitely move around however.
  • Sometimes you just have to say that you can't make any good decisions about what is actually happening due to a lack of useful (i.e., non-noise) information.
  • When you are not certain, stay small or stay out. I have learned that when I'm dead certain I can still lose money, thus when my conviction wanes so does my exposure.
  • A stock doesn't tank simply because it got "expensive," but when things go wrong, the percentage decline that might occur is a function of valuation.
  • I go back and forth between investing and speculating and they require totally different rules.
  • Sometimes it is clear that what you think just doesn't matter and may not for some time. When that becomes clear, you just have to cut back.
  • A liquidity crises means that people are having trouble turning investment positions and assets in general into cash. The central banks encouraged (forced) people to abandon cash and now turning stuff back into cash isn't so easy, though it never is when you hit a bear market.
  • Emotions are your enemy, but then you also have to be disciplined, too. Human nature never changes.
  • RE: Shorts. I will always use specific stocks. I always want as many reasons for something to decline as possible. Yes, I look at charts (and never try to top-tick shorts), but I want catalysts more than anything else.
  • I think I have consistently advocated, over and over, that long gold (and miners) was a better strategy than being short.
  • Four rules to use (for shorting):
    Focus on the Fed and what it is doing, as well as folks' belief in them. That sets the strategy about how to trade.
    Is the market hitting new highs? If so, avoid shorting. If it is declining then you can be more aggressive.
    How are stocks reacting to the news? If bad news doesn't matter, don't short.
    Have catalysts for your ideas. Individual company risk management is a separate topic.
  • Where a stock once was (up or down) is sort of meaningless as many variables can change.
  • The gold market has always been noisy and subject to wild swings. This is nothing new.
  • Where a stock was or -- said differently -- how much it has gained or lost doesn't really mean anything about where it is going and when. Admittedly, sometimes in rallies an extended move will lead to a decline (and vice versa), but that isn't always the case, and it doesn't mean that any decline (or dip) is something you can understand and capitalize on.
  • The market is quite often not even remotely rational.
  • Corrections aren't fun, period. They test your resolve, but that is part of the process.
  • I think the bond market losing faith in the central bankers (which should have happened decades ago) is THE endgame.
  • When the bond market finally implodes on the central bankers, then we will have to live within our means.
  • There is little rhyme or reason as to what goes on in the short run.
  • When it comes to cash, I never ever stretch for yield, FWIW.
  • Commodities in general, for a variety of reasons, are not necessarily great inflation hedges, though precious metals are.
  • Folks can see why I have suggested that they not try to trade too much. Sitting, though hard to do, is the key in a bull market even though it will make you feel extremely stupid during corrections.
  • The fantasy that all is well continues, as does the belief that TINA (There Is No Alternative) is a sound investment strategy.
  • As we have seen over the last couple of decades, it is almost as though the bigger the mass delusion, the longer it lasts.
  • I do not believe the central banks are COVERTLY manipulating markets.
  • Productivity and progress are not to be feared, though giant misallocations of capital are. A hundred years ago we were an agrarian society for much of the country, those jobs are gone, but others were created. Bubbles are the real danger and we have had them in spades, thanks to the Fed.
  • It is just human nature that makes it difficult to make money, regardless of who you are.
  • You can't forecast what will change something that has never been seen before. We just have to wait for clues.
  • The tracking error is enormous with leveraged ETF's.
  • A lot of my options go to zero, but when I win I usually take my cost out as soon as I get a good opportunity.
  • Speculation (not to be confused with investing) is an art, not a formula.
  • Once you know something is affecting your thinking, you need to address it. You need to do something to reduce your risk - turn your position into calls or buy puts or do something so you don't get forced to act under pressure.
  • Much of corporate America is playing games with the accounting by reporting non-GAAP crap.
  • There are no good inflation calculations that I find useful.
  • In the next wipeout, computers will likely figure prominently, and not in a good way.
  • I don't trade solely on fundamentals; I use macro and technicals, too.
  • Paper currencies today are 100% confidence-based. I don't see how the current environment won't undermine that, but so far euphoria rules.