I had already discussed my poor investment performance in 2013 thanks to being bearish on Euro and being bullish on gold. Nor did I capitalise on my good calls (getting the AUD correction/mini-crash correct). Clearly, I am not a good trader. I knew that.
Hence, it came as a small consolation to know that some marquee names in the hedge fund industry had a difficult year last year. Well, they may be able to live with it…
Barry Ritholtz, the author of at least one book on the Global Crisis of 2008, and owner of the popular blog (www.ritholtz.com) had a ‘I told you so’ article in Bloomberg on why Gold bugs lost their shirt in 2013. I do not consider myself a gold bug. I believe in its insurance value and I still do.
Barry Ritholtz is a smart man. He was bearish leading up to the crisis of 2008 and turned positive on stocks reasonably early in the cycle and has not been enamoured of gold much, if at all. So, he does have the right to ‘show off’. Despite his attempt to convince us that he is not showing off, he does not make much effort to hide his pride. One cannot fault him for that.
My response to his article was published in MINT on Tuesday – my weekly column.
I noticed that Felix Salmon in Reuters had a more pungent and scathing response to Ritholtz’ piece. Much as I disagreed with Ritholtz’ views on gold, I do believe he made valid points. The most important one is that, no matter how good a story is, it is important to continuously update one’s judgement on whether prices reflected all the possible good news about the asset (perhaps, then it is time to sell) or all the possible bad news (then, it may be time to buy).
Most of us know that these are easier said than done. They involve judgements and judgements can go wrong.
With quantitative easing, tepid recoveries economies and disproportionately vigorous recovery in asset prices (same old, same old), I doubt if the case against gold is cast-iron (nice one, no?).