TECHNICAL   SCHMECHNICAL

Introduction

Many of the posters to a popular Precious Metals (PM) discussion forum^[1] claim to be into the Precious Metals for the long haul, but in actuality they have a Technical Analysis (TA) bias or concern.   By this, I mean they are extremely concerned with day-to-day price movements, trumpeting or bewailing every $1.00 or $2.00 per ounce movement in the Price of Gold (POG), for example.   There are endless debates about resistance and support levels, trend lines, various technical indicators, etc.   Furthermore, there are endless ruminations as to when to "bail" if the price decreases, and when to "cash in" if the price increases substantially.

I've been waiting for the trip "to the moon" (PM pricewise) for years.   It's always just around the corner.    But I am in for the long haul.   My objective is to increase both the ounces and inflation adjusted fiat currency (US$ or whatever) under my control by judicious buying and selling from time to time.   Undoubtedly TA has its uses, especially for short term trading, and especially in highly leveraged markets, such as futures and options.   But it may not be suitable for most people in a long term accumulation mode.  Also, simple "buy and hold (buy and hope)" or "buy when some spare cash" methods have their problems, as people who bought gold at $600 to $800 per ounce some years ago can tell you.   Now, there is an alternative to the above.   continued below...

My point is --

WHY TRY TO PREDICT THE MARKET?
WHY NOT LET THE MARKET TELL YOU WHAT TO DO?

Use  CORE  POSITION  TRADING™ (CPT)

The original version of this article was addressed to "gold-bugs".  This revised version is applicable to anyone holding stocks or mutual funds of any kind, not just to those having only some sort of position in PM bullion, bullion coins, and/or related PM stocks and mutual funds.

All or part of your present holdings can be considered as your "Core Position".  If you trade your Core Position properly, you can eventually greatly increase your position in both holdings and cash, and eventually reduce your average cost per share to LESS than zero.   And, Core Position Trading does NOT require the prices of PMs or your PM or other stocks to go "to the moon".  (Of course, if the PMs and PM stocks did go "to the moon", that would be lovely, because it would wipe out a lot of ruling class apologists, quislings, and assorted other smug a*ho*s.)

Anyway, this alternative method of trading is called "Core Position Trading™" (CPT).

I heartily recommend you get Robert Lichello's How to Make $1,000,000 in the Stock Market Automatically!   Don't let the "hokey" title put you off.   The book was first published in 1977 and is now in its Fourth Revised Edition (December 2001).   It's available on Amazon.com for about $7.00.   [2002-05-29]   AIM is a very effective method of trading your Core Position.   Good News -- Lichello's book was unavailable for awhile, but a Fourth Revised Edition is now available.   [2002-05-29].

There has been speculation, mostly involving wailing and moaning, on that PM forum mentioned above, about how the "big boys" (TPTB) force the gold price down so they can buy on dips, then let it go up and sell on the rallies.   You can follow that lead.   The question is, how much do you buy at what price(s) on a dip, and how much do you sell at what price(s) on a rally?   Lichello's method answers that question.   And YOU ARE STILL POSITIONED if/when the gold price hits $2500 (whatever) per ounce.   But the price doesn't need to go "to the moon"; as long as prices thrash around, at whatever general level, you can eventually make out.   (You do need SOME price volatility, like that seen recently.   [Spring 2001])

A general discussion of Core Position Trading can be found at
http://www.bean-d.com/cpt/.
A description of a software program that calculates the amounts to buy and sell at various prices, following the Lichello "AIM" methodology, can be found at
http://www.bean-d.com/cpt/aim-stock-etf-transaction-calculator.htm.

If you are interested in "Buying Low and Selling High", without trying to predict prices, you need to look into Core Postion Trading™ (Core Position Trading).

[1]  The above is a revised copy of a posting to that forum some time back in 2000 or 2001.  I am not mentioning the name of the forum or posting its URL since the forum owner "banned" me for self-promotion, including links to some of my pages such as this.  Tit-for-tat.    back

If you would like assistance (consulting) with your Core Position Trading or AIM questions, refinements, and trading
contact me (David A. Bean)

NOTICE!

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This web page or others written by, hosted by, or linked to by David A. Bean are not to be construed as providing investment advice.  This material is provided for informational, amusement, and educational purposes only.  Consult a duly (dully) trained, authorized, credentialed, licensed, and brainwashed establishment professional before engaging in any financial transactions relying on this or any other information.