Its just a matter of time for the PM sector, to reach “normal” valuations, relative to the price of the underlying metals. Even though the SpockM portfolio is up over 200% in 6 months, we are nowhere near “normal” valuations, especially in the smaller cap rocks. Having patience is the key and letting the market do its thing, without worrying about the intra-day volatility.
I have addressed this aspect before. Please do not ask me why XYZ stock has dropped 10% today. Is there something wrong with the company? Most probably nothing has materially changed. Its human psychology in action. Fear, as the crowd is puking. This is normal and comes with the turf. If everything was going up everyday in a straight line, I would be most concerned! As that is not normal.
In a world where everything is instantaneous and folks expect results “now”, not tomorrow, we have the edge, by being focused on the big picture and the ultimate prize. We invest extra-day and can see the forest, whilst the crowd is looking at the grass, day trading and stressed out, focusing on every word from the financial media, every move by the crowd, like a rabbit in the headlights.
For example, here is big picture stuff. This is the producer price index (PPI), or a measure of “inflation” in China. China is enroute to turn PPI positive by the end of this year.
‘Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair’ – Sam Ewing