Clowns to the left of me jokers to the right

I love it when Larry Berman goes on BNN. The guy has been atrocious in making calls on the market for as far as I can remember and yet they still have him as guest on his own segment called "Berman's Call". Here's his latest views:


1) Gold: LT bullish ST bearish....buy on a correction at around $1300
2) SPX: looking for a pullback to 1165 area
3) Canadian financials: too late to buy
4) LT bearish on nat gas

If you fade these calls there's a good chance it will turn out to be right. So, without further ado I would like to present to you Bizzaro Berman's call!

1) Gold will either keep going up with only minor dips or it goes down lot further than $1300.
2) The SPX keeps going up with only minor dips or it goes well below 1160.
3) Its not too late to buy Canadian financials
4) Bullish on nat gas long term.

Tune in next week for another episode!

Let me talk about gold again. Berman is yet another "expert" who is long term bullish on gold but short term bearish saying to get in on a good correction. This has been the unanimous consensus for at least 1 month and if you listened you would have been still sitting on the sidelines, shorted or sold too soon watching gold go to new highs. This is a classic case of Mr. Market foiling the herd. By the way do you know anyone out there who is LT bearish on gold? Isn't if funny how after a 460% rise in the price of gold over 10 years everyone is LT bullish on gold? The same jokers I bet were long term bearish in the late 1990s.

Having said that though, I've noticed a lot of the same retail shmucks (I love this word) who were top picking the market getting run over had also been top picking gold and/or bottom picking UUP getting run over just the same trying to capitalize on a ST counter trend move. So many people out there are making the classic semi-sucker mistake of trying to be a smart ass by betting the other way of something that has made a strong move. People do this out of revenge or ego....revenge, because they missed out of the move and now they want to "get even" with the market betting the other way....ego because they want to be able to proudly say that they top ticked or bottom ticked something.

I've learned from experience and from others that 90% of the times counter trend trading i.e. top picking and bottom picking, is a losers play no matter how strong a move has been made are because a trend that's in place today is very likely to still be there tomorrow...that's just the way momentum works. The vast majority of my success has been going with the trend buying high and sell higher. That doesn't mean blindly chasing parabolic moves but rather looking for stocks that are gradually making new 52 week highs in a non-parabolic way without a lot of media attention. When I look for bottom fishing/turnaround candidates I want to see at least 5 months of base building/topping action or a reversal in trend.

Getting back to gold, you'll know when the gold bull market is over when the consensus calls for a correction and they get it right....chances are that correction will be the first move down in a bear market or crash. This is what happened when the NASDAQ bubble and oil bubble burst. In my last post about gold I said to keep an eye out for when gold trades 30% + above the 200DMA because that would when you should look for the parabolic blow off to terminate into a crash or new bear market. However, gold's cousin silver is already at 42% above its 200DMA! This is just about as far above the NASDAQ was from its 200DMA when it made its bubble peak in March 2000! This just goes to show you the difficultly in catching tops/bottoms. An extreme can simply get to an even greater extreme.