My 1st Million At 33 – yes, you can do it too

I can’t believe that it will take me many many thousands of dollars of loss to bury my head into my own mathematical trading model which has told me to sell. I only wish I can trade full time.

This gold correction is definitely going to last quite a while. I guess what’s most unexpected was the duration of this previous up wave, only a mere 7 months. Now the question is where gold is going to bottom. Assuming that the previous up wave is 1 of 3 in Elliot wave, I believe the “first” bottom for gold to bottom at about $850, and HUI to bottom at 400. Gold can possibly go down to as low as $760, dragging down the entire complex way down. If it goes to $750/$760, I believe the wave count should be 5 of 1 for the most recent peak.

And very likely, precious metals won’t go anywhere for the next 9 months. Yeah, we may not see $1000 again in 2008. It’s going to be dead money.

Where should you invest your money? As I have said last week, I believe the danger zone for stock market is probably over temporarily. Of course, my own opinion is different from Frank Barbera and Bill Cara. I don’t think stock markets will break new high at all, but I believe a new low in stock market is probably not going to be in this year. Yes, we have seen the low for this year I believe. But we might not have seen a lower low yet. It’s apocalypse postponed.

On the other hand, I also don’t believe that mining stocks will go as low as Bill Cara has described. Of course, it’s only my personal opinion, based on my own count of Elliot wave.

I have taken a little long position, and closed some of my short hedges yesterday.

I have not sold much of my long positions in precious metals. I guess one of my biggest problem is that I have too much cash, which prevented me to raise more cash by selling. My total cash position is now as big as my total liquid net worth when I just started my blog, which is mainly due to my leveraging on my primary residence (through refinancing), and my relatives’ cash. Since I think more in terms of asset allocation rather than trading, I don’t want to pile up more cash. That was my problem last time when gold peaked in 2006. And I am repeating my mistake again.

Nothing beats good trading (even a good asset allocation), but only if you can repeat it time after time. Certainly, it’s a little hard to asset allocate when my cash position grows so much. Unbelievably, I’m still 50+% in cash (if I count my SHY holding as cash). Of course, that’s not any comfort for my huge loss (relative to my annual salary) in precious metals sector.

P.S. Don’t buy into the stock markets today. It should be worth your money to wait for some financial companies to go thru their earnings before you buy into the general stock market. That will also give you more time to assess this market. Furthermore, I just don’t think this stock market is going to cruise to new high this year or the next. Bottomline, you shouldn’t miss a boatload of profits even if you don’t ride on this train.