At this crisis point in history - what could possibly create these rare and extraordinary gains?

An Arizona multi-millionaire's revolutionary initiative is 
helping average Americans  find quick and lasting stock market success.

Since the Coronavirus came into our lives this slice of the stock market has given ordinary people the chance to multiply their money by 96% in 21 days on JP Morgan.

Investing, Stocks, Trading  | July 28, 2020

There are plenty of good reasons to like gold right now. But its utility as a stock market hedge isn’t one of them.

As the S&P 500 closes in on new highs amid lots of economic uncertainty, plenty of attention is being put on gold.

And for good reason – gold is in full-blown breakout territory this summer.

(At the same time, the economics of long-beaten-down gold mining stocks are such that they’re effectively a leveraged bet on gold prices.)

But that doesn’t mean that gold is a safe haven for investors getting anxious about the stock market.

The conventional wisdom has long been that gold is a wise contrarian play to frothy stock market valuations. But that doesn’t pan out in the data.

Looking back at all 15% or worse S&P 500 drawdowns from 1975 through today – times when investors could reasonably feel like stocks were in crisis territory – gold has only “worked” about half the time.

What’s a better investment than gold when stocks are in crisis? Stocks, for one:


The chart above shows average returns of gold vs. stocks following a 15% drawdown in the S&P 500. While both assets initially have a strong positive correlation, that typically reverses strongly about 40 trading days following the drawdown point, and continue to be negatively correlated for about four months.

The stock market's mean-reverting tendencies make it a better absolute bet than gold when there's blood in the streets.

Looking at individual returns 180 days and 252 days (or about one trading year) later, gold returns are left-skewed and lack the fat tails of stocks following a crisis.


That jives with this chart from Verdad Capital that shows gold’s status as the worst of a collection of stock market hedges:


Does that mean you shouldn’t own gold right now? Of course not! 

From a trend following standpoint, gold’s price action looks stellar right now.

But it does mean that if you’re allocating to gold in hopes that you’ll have a hedge against stock market risk this summer, then you might be in for an unpleasant surprise if this market does wind up taking a turn for the worse.

It’s a much better idea to decouple gold from your stock thesis in 2020. 

A revolutionary initiative is helping average Americans find quick and lasting stock market success.

275% in one week on XLF - an index fund for the financial sector. Even 583%, in 7 days on XHB… an ETF of homebuilding companies in the S&P 500. 

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