#219. Exit Strategy For Investment

Know When To Exit

Many things are happening around my life in the past few weeks. Among the biggest was involving in a car accident. The car was badly damaged in the back, but I was safe. Thanks to the faithful strong Mercedes-Benz I was in.

I was stopping at a traffic light when I heard a loud bang. And in a split second I was hit. A Wira was driving very fast and rammed into the taxi behind me. Both the taxi and I was stopping at a traffic light. And we were stopping! How could a car drive so fast nearing a traffic light? The Wira driver surely was not paying attention on the road.

And the taxi driver made a common mistake most drivers make. He didn't step on the brake and use the handbrake when stopping at the traffic light. So when his taxi was hit by the Wira, the car flew into the back of mine. Since I had the brakes on, my car moved only slightly. Still, the momentum from the Wira was so great that my car moved and hit slightly the rear bumper of the car in front of me... Imagine that. 4 cars were damaged that night. All because of a person who did not know when to stop his car.

That brings us to the topic of this post. Exit strategy.

Investing is like driving a car.

You got to know when to buy just like when to drive out from the junction joining the main road. It's all about the timing. Too fast or too slow, you risk being hit by the oncoming cars. The timing got to be right.

You need to know when to switch lanes. Time when you want to switch lane and put on the signal lights. Many drivers I see just swerve to another lane even when the cars are moving. And causing traffic jam at the back of that car. Because the car in front of him/her have already move on. And then sometimes, they turn back to their original lane because the road in front is already clear. Hard to explain here what I see often. Hope you know what I mean. And it is very irritating.

The lane switching worsens traffic jam. Every time.

You also need to know when to apply the brakes and stop the car.

I noticed the top/peak around towards the end of June, and was considering selling my investment in AmPrecious. Price reached a peak of RM1.022 on 21 June 2010. And towards the end of June, another peak of RM1.016 on 28 June 2010. Any price above RM1.00 is a good time to sell.

While any price below RM1.00 is a good buy. Price around RM0.90 is even a better buy. The price on 29 July 2010 was RM0.9109.

Looking at the gold price, and some charts, I fear the price now may dip further. Not sure how much though. Looks like another valley may form. Unless price moves up strongly again.

The MACD of weekly gold price chart is pointing downwards. The Stoch RSI indicator meanwhile is showing that we have reached a bottom. And is a good opportunity to buy.

We can get better confirmation to buy when the daily chart has positive indicators. The Full Stoch is getting to move upwards after weeks of staying at the bottom. So is the Stock RSI indicator. Once the MACD becomes positive, then it will be more confirmed that price is heading back upwards.

So, I am holding now at paper loss. And start to think where my mistake was. It was the 'exit strategy'.

I have forgotten the important advice in investment. Know when to exit when you buy. We got to plan when to exit. We got to know when to sell when the price goes up. We got to know when to cut loss when the price does not go our direction.

If you are looking to buy, wait for the opportunity. After this storm, we will see good weather again. Although I am confident price will be stronger next year, somehow I also fear the coming global market dip. Somehow, I don't know why, I can feel it. Not sure if people call this sixth sense. I feel something terrible is happening very soon to the world. The stock market will fall very soon in this second half. And this may affect gold like how it did in October/November 2008. The weakest point this year for stocks may be around August/September.

In another article I have mentioned that I see gold price around USD1,400 in August/September. Maybe the coming market crash will make investors fleeing from equities to gold. It is really hard to say. Whatever it is, I am ready to hold my investment for a long time until I achieve profit.

Seasonally, August and September are also slow months for gold price. I just hope the price does not stay down too long.

For those readers who have asked me to write often, thank you for your support.

Please leave your comments and thoughts on where do you see gold price in August/September 2010.

#218. Earn Cash From Gold Investment

Earn Cash From Gold Investment And Get Rid Of Debt Quickly

A Guest Post by Jason Holmes

In the past 2 years, the cost of living has become very high. The price of basic commodities has increased due to inflation. Therefore, if you are one of those Americans who are finding it extremely difficult to meet your living expenses and pay off your unpaid bills, then you can invest your hard earned money in gold and get rid of debt quickly by making a good profit. 

Invest in gold and earn money

Gold is one of the most precious metals. Among all the most precious metals such as silver, zinc, and copper, gold is the most popular and safest form investment. If you invest your money in gold, then be sure to make profit in future. The reason is the price of gold is increasing day-by-say. In July 2010, the price of gold has reached $1208.10 per ounce. So, you can very well imagine the amount of money you can earn from gold investment. The extra money that you'll earn from gold investment will allow you to get rid of debt within a shorter period of time. 

Most of the Americans hire a debt settlement/management company when they are unable to pay off their debt. But these companies charge a fee for their services. This implies that they need to arrange some extra cash. So, like most of the average Americans, if you have hired a debt management/settlement company to reduce your debt, then you can utilize this money towards paying the fee of these companies. Also, you can use this extra money to pay back your creditors. 

Types of gold investments

Let us know some of the primary types of gold investments: 

• Gold coins: This is the most popular form of gold investment. You don't need thousands of dollars to purchase gold coins. You can purchase gold coins and insure them. The insurance companies charge low premium rate on the gold coins.

•  Gold bars: You can invest your money in purchasing god bars and keep them safely in your locker. If you really need money, you can sell those and make a lot of money.

•  Gold mining stocks: You can even invest your hard earned money in purchasing gold mining stocks. If you purchase stocks of gold mining firms/companies, you can earn a lot of money when the price of gold increases.

 Key benefits of gold investment

Some of the key benefits of gold investment are given below: 

•   Gold is imperishable.
•   There is a huge demand for gold in the jewelry industry.
•   Generally, gold appreciates in value.
•   You can transport gold from one place to another easily.  

Finally, if you can invest in gold intelligently, then you can earn lot of money and get rid of debt quickly. Thereby, you can get back to your normal life and sleep peacefully.  

Jason Holmes is a regular writer with Debt Consolidation Care and is also a contributory writer with other financial sites. His expertise is woven around various aspects of the debt industry and with his e-books he tries to impart to people the different situations and simple solutions to get out of difficult situations. Some of his works include e-books like 'Credit Score The Quintessential Therapy for a Happy Pocket', Take Creditors and Collection Agencies to Small Claims Court' and, My Story- From Depression To a Smile'.

#217. Buy Gold At V Bottom

Click to enlarge the chart.

Buy gold. In the last article, I have said gold was on sale. It is still on sale. But don't wait too long.

You can see on the chart above, HUI Gold Bugs Index (which also mirrors the movement of gold price) has touched the blue line. And bounced back. Looks like the uptrend is till intact. It is swimming back in the uptrend channel.

And look at the indicator at the bottom - The Stochastic RSI. The brown spot has formed and completed. Price is moving up again. You can see in all the previous times where these brown patches appeared. Each time gold made a V bottom.

This is again a V bottom. A valley. A moment you have been waiting for. A time to buy. And timing is everything.

For example, the Amprecious fund price reached a top (shown as the green patch on Stochastic RSI) on June 21. This was a time to sell. I didn't sell and take out some profit. Price was RM1.022.

Then price dropped to the valley. Price on July 5 was RM0.9244. On July 6, it was RM0.9259.

You can calculate how much the price has dropped from RM1.022 to RM0.9244. That's a 10.5% dropped. So if you buy at this V bottom sale price, when the price moves up you may easily gain 10% within a short period of time.

But again, as said before. Hold it for long term. Of course, in between, if you want to sell and take out some profit. That's good also.

I am still confident price will move higher. My forecast is 700 HUI points in January/February 2011 timeframe.

Phase your buying as suggested in the last article if you are not comfortable buying lump sum. Buy at every valley. Sell at the peak.

Please study the chart and make your own conclusion. Price may go down. May go sideways. We never know.

Happy investing. To prosperity and beyond! Can't resist this one with Toy Story 3 being the fad with kids nowadays.