05 December 2014
Profiting from the delta between stupidity & fact
Tekoa Da Silva has an interview out with Rick Rule with a great headline: Speculative Profits Are Made On The Delta Between Stupidity & Fact.
It is a bit long at 77 characters, Tekoa could have simplified it to Rick Rule: Speculative Profits on The Delta Between Stupidity & Fact, which is 68 characters, just shy of the magic 65. But other wise it is brilliant, combining name recognition; "speculative", a hot word in the gold blogosphere; "profits", which implies you'll make money; "delta", which makes it sound technical and intelligent; and switching Rick's use of opinion in the original quote with "stupidity", a much more emotional word. Maybe Tekoa is a subscriber to John Winklebottom's service?
Anyway, the money quote from Rick is:
Remember that making money in speculation is done by taking advantage of the delta between opinion and fact. It has been said by many knowledgeable observers that the market in the near term is a voting machine. In the long term it’s a weighing machine. Speculative profits are the delta between the way people vote (which is always stupid) and what stuff weighs.
In the article he is talking about mining equities but in offline email discussion with a bunch of gold iconoclasts, the point was this stupidity/fact delta equally applies to the tabloid end of the gold blogosphere. They make money selling stupidity and you can make money trading on fact.
Coincidentally, a few days ago in another email discussion I had with a pro market trader he made the following comment:
I noticed just now that someone had forwarded you that fine example of someone who understands nothing about how metal is used nor invested in writing about that of which he is ignorant. That’s what I love about the precious metals markets: They are full of fools who make it easy to make money betting against them.
What's that saying about not knowing who the sucker is at a poker table?