Wednesday, April 13, 2011

Quote of the Day: Brent Spread Will Keep Going Up Until It Stops

Tonight on Fast Money on CNBC, Dennis Gartman had some sound advice on investing in general. Specifically though he was talking about the spread difference between Brent Crude and WTI. As he says during this clip, the spread will keep going until it stops. While that might sound a little arrogant to some, it really highlights how markets work.

The oil market in 2008 kept going up until it stopped. All this nonsense on predictions just aren't that useful. An asset will keep going up until it stops. Just like tech stocks in April 2000 and housing a few years back. People kept calling them bubbles and stayed away, but in the process they missed out on huge gains. The key is to recognize when the rally ends. Buy and hold can work in non-bubble markets, but the worst thing an investor can do is ride an asset class up and then let all the gains evaporate.

Anyway, this an important lesson for any novice investors or anybody that wants a target price. The market just doesn't work that way. Assets keep going until they stop and predicting the stopping point isn't the goal. The goal is to recognize the end of the ride.



No comments: