Learning out of a book is great, but until you actually experience something first-hand, your knowledge surrounding that topic will be greatly limited. Take, for instance, investing. Amateurs enter the stock market every day thinking they will outsmart the system and buy at the bottom and sell at the top. It is usually after the average person loses their first $5,000 that they start to realize there might be a little more to investing than just buying and selling on a whim.
What has happened in the precious metals sector — including the miners over the past 4-5 years — will go down in history as one of the greatest learning experiences for those who actually got their hands dirty buying “solid” investments and having to watch their holdings get decimated by the bear market. To be fair, many of us thought we were purchasing our investments while there was blood in the streets. After all, in 2013 most everything related to metals were down 50%, and who would have thought another 50% decapitation strike was around the corner?
Here is the problem… The brutality of the bear market has scarred many people and is keeping people at bay from ever investing again – especially in the mining sector where, hundreds — and even thousands — of percent returns will be seen.
I was speaking with a reader about silver, and he was expressing to me how worried he was about silver’s downside at $17, but when I asked him what he was doing when silver was at $30 and $40, he said he was backing the truck up, no problem.
Logically, it makes no sense to be fearful of silver in the teens after being so bullish of silver at $40. But understandably, the brutality of the bear market has taken its toll on people’s emotions.
It takes conviction to buy when things are depressed, and it also takes discipline to sell at the right times and not get too greedy.
The experience of the most recent bear market is something everyone needs to fully soak in and remember because this will happen again as an investor and it will take overcoming your emotions to buy the dips even if prices continue to fall, knowing that the turnaround will eventually come, assuming you are buying value.
Here we are today, on the verge of what could be the most exciting bull market in our lifetime.
As much of a learning experience the bear market was, I want you all to fully experience the bull market as well. Believe me, watching some of these stocks skyrocket 50%-100% tempts even the most prudent of investors to sell and take the profits. Again, after being conditioned to assume bear market tendencies, I know in the back of your minds, some are wondering if this is just a dead cat bounce, and if these gains are only to dissipate with more disconcerting news from the precious metals sector.
The gains that will be seen will completely rock your preconceived notions of what sort of potential lies ahead of us.
The Bull Market is In
We are seeing higher lows in the price action of metals and miners. The metals are seeing 52-week highs. With the metals up roughly 20% from their lows, many of the miners are up 50% to 300%. The GDX, a popular ETF that tracks gold miners, hit a low this year on January 19, and is up 85% as I write this morning. Seeing the miners run, followed up by the metals is a historically bullish pattern.
We have only scratched the surface on what is yet to come, but the only way you will fully experience this is to be in the game. As bad as and depressed the bear market was, the bull market will be equally as spectacular, with the last third of the rally being the most dramatic, with great exuberance entering the sector. It’s going to be hard not to want to throw money into overvalued stocks at this time because in the moment, it will seem like the sky will be the limit.
If you experienced the brutality of the bear market, you owe it to yourself to enjoy the fireworks of the bull market.
Keep in mind the only way to sell high is to buy low…
Don’t let this learning experience of a lifetime pass you by!