Last Year’s Losers…?

Only two months ago we authored a blog post titled, “Last Year’s Losers… Could Be This Year’s Winners.”

Certainly it is very early in 2014… too early to call anything a winner or loser. But… isn’t it fair to consider if that statement holds any water so far?

Perhaps the topic needs an example to illustrate the claim. Let’s take the obvious one off the table and take a look… some of the most hated asset classes of 2013 were gold – especially gold miners. [Please note: This is not us about to tell people to run out and buy gold investments. We’re simply using an example given this asset class’ universal status as a “dog” of 2013].

For context, gold was down roughly 26% in 2013, and the gold mining index was down a whopping 51%!

So… where are they now? Gold has started the year up about 9.5% and the gold mining index is up roughly 25% YTD. And it’s only February.

Our point is not to suggest any specific investments in this venue… we prefer to focus on the concept of exactly how hard it is to act in the opposite way of what your emotions are telling you to do – something that every successful investor has to do. The word “counterintuitive” sums it up pretty well, but it is obviously much easier said then done.

The most common concept in investing is: “Buy low, sell high.” So why do so few investors do it successfully? The final sentence in our 12/15 post is:

“The tough question is: How hard is it to ACTUALLY do the opposite of what you think you should do?”

• Can you think of other situations in your life when you had to make a decision that went against your feelings? What was the outcome?

Categorized in: Blog

This post was written by Conscient Capital