Tuesday, May 26, 2009


I often have investors ask me what my target is for gold, silver or XYZ stock.

I'm not sure how this preoccupation with targets got started. I'm guessing a few bloggers or gurus have gotten into the habit of posting these "targets" as a way to prove their prescient powers.

Hey let's face it, when the market rallies and achieves their objective it does make them look like they knew something that the rest of us mere mortals were not privy to.

Let's dispel a few myths shall we. First off, no one has a crystal ball. That one is written in stone and it hasn't changed in the last 5000 years that I know of.

Now let's take the current stock market climate as an example. Pretty much all gurus recently are posting upside targets. Anyone who has been pumping the bear case has whiffed badly. Those guru's are probably losing followers by the dozens in this climate.

But let's go back to the bull prognosticators for a minute. Since Mar. 9th we have been in the second most powerful bear market rally in history. Seriously, is anyone surprised that upside targets are getting hit? Everything is going up! It doesn't take a genius to figure out most stocks go up in a bear market rally. Hell, one could draw a line at just about any spot on the chart and when it was reached claim "I predicted that".

Just don't break your arm trying to pat yourself on the back. If you really want to get my attention tell me where the top is and how far down the next leg is going to go. Now that would be a nice trick!

I have to ask what's the point of a target? Are you going to take profits if your target is hit? Are you then going to sell short? Tighten up your stops? What do you do if your stop is hit but the stock then proceeds to move higher? How about if your target is hit and you take profits but the stock just continues higher? How does one determine if they should take profits at the first target? Second? Third?

Targets are a great way to impress the masses but I'm not sure how one would go about making money with them.

Folks don't waste your time asking me what my target is, I have no idea.