Letters To The Editor
FOOLS GOLD
Jeffrey Christian’s January 2010 article prompts this comment. Aside from jewelry (the expenditure for which diminishes during times of economic imbalance), gold essentially has no intrinsic value. There is no fungible market in gold; hence, one encounters a 5 percent to 10 percent markup on purchases and a similar markdown when one sells.
Also, gold ownership generates no income. It does, however, have a perpetual negative cash flow due to the expense of storage. And an opportunity cost—i.e., the money invested in gold could have been more productively invested elsewhere. Even Treasury bills during the year would have been superior. Why then gold?
—Norman Meyerson, Reno, Nev.
KEEPING IT SIMPLE
I found it refreshing to see in Michael Carr’s January 2010 article a thesis that is simple but profitable.
Carr’s strategy is so simple that it would be easy to discard if one were only to look at the rules, but the results are compelling and easily backtested, even in Excel. From my cursory exam, I find no evidence of curve fitting nor result bias—99 percent of what I see out there is guilty of both.
So, kudos to SFO and Carr for a great and timely article. I look forward to more of the same in 2010.
—Tim Jordan, Denver, Colo.
HISTORY LESSON
In Chuck LeBeau’s February 2009 article, he says that Welles Wilder introduced the true range and average true range. I think I first introduced using ATR as a trailing stop at the 1992 TAG XIV conference, but if anyone has seen an earlier reference, I would be interested, as many good ideas have been thought of independently.
—Cynthia A. Kase, Santa Fe, N.M.
MORE FOR YOU ONLINE
SFOmag.com exclusives:
• “Feet First: Step, Don’t Dive, into FX Trading” by Marilyn McDonald. In this article, she shares what she wishes she would have known when she first started trading currencies.
• “Be Prepared: Protect Yourself from Forex Fraud” by Brian Twomey. Learn the red flags to identify potential forex scams.
• Excerpt from the new book “Go Long: New Options Strategies for Buy & Hold Investors” by Mike Tosaw.
—SFO
COMING IN APRIL
Regardless of whether you think green is good, environmental concerns are increasingly affecting commodities and stocks. Now’s the time to consider positioning your trades in light of this, and SFO will help you do that.
Visit the “Sneak Peek” page at SFOmag.com after March 15 for excerpts of the April 2010 articles.
—SFO