Pyramid Investing

Prospects for New Year 2010

Leaving 2009 in good memory

Dear readers, Pyramid Investing concept is doing great! As a matter of fact, it kept exceeding my expectations since its very inception in June 2009. Particularly nice and generous profits were flowing in for the last four months as the precious metals market broke to the upside. Volatility hasn’t been extreme in any way, and yet the annualized returns achieved were way above the average. Risks taken were minimal. I would dare to reiterate that Pyramid Investing risk-to-reward ratio is smallest of any investing approach anyone has ever though of!

Trading along the pyramids has been robotical as it is supposed to be. Yet the excitement of such trading was outstanding. Pyramids respond to the King Price. They don’t care about anything else. They bring the peace of mind and worriless state for investor’s stomach. Stress remains the term unknown to pyramid investors. Some of the trades produced an ever increasing wondering about the other side of our trades: “What were they thinking about!?” That happens all the time when we buy at the exact low and sell at the exact high!

As I am posting this on the last trading day of 2009, I would like to express great satisfaction with Pyramid Investing concept and consistent profits I was able to realize throughout the year. Thanks to Pyramid Investing, this year will certainly be remembered in my investing career as a turning point. I haven’t booked a single loss and not only that, I am confident that not a single investing loss will ever be booked in my account as long as I invest! You should be able to achieve the same with your investing account.

Looking forward to 2010

I am looking forward to new 2010 with enormous excitement. But don’t get me wrong, times are not rosy at all and troubles mount with each coming day. The fight for financial security, not to mention survival, will be on top of the list for many a fellow citizens.

I have embraced Pyramid Investing with both of my hands and I am convinced I have one extremely powerful tool to come out as a winner from that fight. Not only that I am not afraid to step into the market fight, but I am looking forward to it and I am absolutely positive about the outcome. I don’t know where the market is going, neither do I want to predict or anticipate any direction. But I do know I will be on the winning side no matter what. You should be able to join the victory as well.

New Year prospects

New 2010 will most definitely bring us many pleasant moments. However, we should prepare our selves and be ready for unpleasant surprises as well. I expect a great deal of turmoil in financial markets in upcoming years. Volatility is only going to increase. Ordinary investors are not going to enjoy the roller-coaster ride. Not all the professionals are going to like it either. Actually, only few are going to fare well in such an environment. As a pyramid investor with proper setup of pyramids, there is nothing to be concerned with. Volatility is our friend and we will make the most out of it. Our ride is virtually guaranteed to be joyful with plenty of rewards along the way.

New Year is expectedly going to bring few drastic changes. Ordinary investors who are used to of seeking shelter and safety in cash and bonds are likely to face a dose of unpleasant reality. The risk of inflation is highly elevated and the prospect of cash losing its purchasing power is close to a sure thing. Consequently, the interest rates are likely to abandon their artificially low levels and start rising again. The impact would be felt by ordinary consumers, new home buyers, businesses and the overall economy. The bond multi-year bull market runs a great risk of turning into a major bear market. No safety will be found in bonds. The vehicle of choice is going to be market of stocks.

But one needs to be extremely cautious. Not all the stocks are created equal. Along with grim prospects for the overall economy, many businesses are likely to suffer, rendering their stock a bad choice. Pyramid Investing remains dedicated to precious metals market. The emphasis is surely going to be given to gold bullion and gold stocks. Energy and food commodities will remain our highly respected runner-up choices. As a means of insurance, general market indices such as Dow, FTSE/Xinhua and Hang Seng need to be utilized in a long sense. Of course, weighting of portfolio components and specific pyramid costs ought to be meticulously planned and maintained.

Having Pyramid Investing in your mind and applying it in your investment account is going to represent a crucial means of successful market operation and achievement of financial victory. This is likely to hold true not only for the upcoming New Year but for the whole upcoming decade and longer. Time and effort invested in mastering Pyramid Investing concept will pay off manifoldly. Being prepared almost equals applying Pyramid Investing. During tough economic times, capital preservation is of utmost importance. However, prudent capital management along with Pyramid Investing offers opportunity to grow investor’s capital base even in such circumstances.

I would like to wish you a happy new Pyramid Investing year! This blog will be around to offer you support in shaping your investing account and help you create some fabulous returns. This is going to be another winning year for all of us, because consistent profits are achievable, after all!

Price Relativity: Buy Weakness, Sell Strength

Is Pyramid Investing possible?

There are several different ways one can look at Pyramid Investing concept and associated philosophy of trading. Since the concept is so profitable, one keeps wondering all the time (including myself) – How’s that possible? Wouldn’t everybody be applying such a concept if it really worked that well?

One of the key principles that makes Pyramid Investing possible is strict adherence to price relativity law of buying only price weakness and selling only price strength. But let’s start from the beginning.

Uninformed, nonbelievers and successful investors

The fact that not everybody applies Pyramid Investing does not invalidate the concept at all. There are at least three different groups of investors from the Pyramid Investing perspective.

Probably the major group is a group of plainly uninformed investors (or misinformed for that matter). They have no clue about existence of a concept like Pyramid Investing. They don’t even realize what they are missing. Besides watching their account balance in red most of the time they keep wondering what’s going wrong. I used to belong to this group when I started as a young investor.

The second group is much smaller: investors who belong to this group have been informed. The problem is, they still do not believe in what they have been informed about. Since you read this blog, you can consider yourself being informed – you ARE aware that there is something called Pyramid Investing out there. Just being informed makes you well ahead of the herd. Being informed in a right way is a big step in right direction. But that alone is hardly going to make you any profits.

The last group is vastly smaller than two other groups. Investors who belong to this microscopic group are very well aware of the Pyramid Investing principles. But not only that, they are seriously convinced that Pyramid Investing is not only a viable concept, but that it is capable of making some serious profits for them. They do believe in Pyramid Investing and they know it is not just another scheme, especially not one of the scam schemes.

Investors who believe in Pyramid Investing and do apply it on a daily basis, make consistent profits that confirm their beliefs even stronger. This is one virtuous cycle. Once you start investing per Pyramid Investing principles, you become a permanent member of that small group of successful investors.

How do I become a believer?

But how do you jump over the threshold and decide to begin applying Pyramid Investing? How do you initiate that virtuous cycle?

My intention is to educate you enough so you can start applying Pyramid Investing on your own. I am sure you will permanently stick to the concept after you book your first couple of profits. Then, you will keep coming back asking for more. You will return to this blog and read every single word over again trying to extract as much information in attempt to become even better pyramid investor!

But I have to gain a little bit of your trust first, before you will even consider starting.

As I mentioned at the beginning of this article, Pyramid Investing philosophy can be looked upon in a few different ways. These ways are very similar in nature and I want to present you with one of them now. I hope it will make you think about Pyramid Investing and hopefully you will come to decision to begin applying Pyramid Investing in your own account.

Buy low, sell high (has no practical value)

We all heard for a general investing principle: Buy low, sell high. This is easier said than done. By itself, this saying means nothing or in the best case it is incomplete. The fact that you are familiar with this saying isn’t going to make you any money. The problem is you never know for sure how low is low enough and how high is high enough. The problem is you are looking for absolute low and absolute high.

Absolute lows and highs are impossible to recognize when they occur. They can be realized only after the fact but then it is too late. Even then, they can be broken. Thus searching for absolute lows and highs is impossible and futile endeavor.

Price relativity

My favorite saying is: Everything is relative. That includes low and high prices. Pyramid Investing does exactly that – it appends the “buy low, sell high” saying with relativity. In other words, Pyramid Investing will want you to trade when price is relatively low or relatively high.

$1,000 Honda Accord?

On the other hand, if I tell you: “You can buy a car for $1,000”, you will say: “It is cheap”. Cheap compared to what? Compared to a nice, fully functional, clean car that you may have in your mind, it is true. But if I say: “It’s an old clunker with a broken transmission”, you will say: “It is expensive”. So price itself means nothing. You need to know more so you can compare and make a judgment. That is relativity I am talking about.

Yet, I can further argue that you don’t need to know anything about the car! I can simply tell you this: “You can buy a car for $1,000, but this is the last one – there were hundreds of identical cars like this last one and they were all sold for $5,000 each!” Would you even think about saying “It is cheap” or would your hand already be in your wallet? Thus everything is relative.

Price weakness and strength

Similar holds for stocks. They are also sometimes relatively cheap, sometimes relatively expensive. I am not saying you don’t need to know anything about the company whose stock you intend to buy, but looking at the price only, you can tell most of the time if it is relatively low or relatively high. Certainly, knowing some history helps: Look at some stock that trades at $20 now. If that same stock traded at $10 a month ago, it would make it relatively expensive now. Conversely, if that stock traded at $40 a month ago, it would be considered relatively cheap now. Thus, once the relativity has been introduced, the same price can become relatively low or relatively high just by looking from what price level the current price comes from.

Once you introduce relativity in price domain, you are not talking anymore about low or high prices. Then, you are only talking about relatively low or relatively high prices. There are even better expressions you can use: weakness and strength:

Price weakness stands for relatively low price
Price strength stands for relatively high price

Thus we finally modified the well known saying “buy low, sell high” per Pyramid Investing philosophy: “buy weakness, sell strength”. Pyramids help us determine existence of price weakness and price strength so we know exactly what trade needs to be done. And it always holds the following:

Price weakness => we are on the buy side and we never sell
Price strength => we are on the sell side and we never buy

Breaking adherence to these two simple rules in Pyramid Investing is considered a heresy. In Pyramid Investing, we always and exclusively buy relatively low priced items that express price weakness. Conversely, we always and exclusively sell relatively high priced items that express price strength.

The addition of relativity to price label makes Pyramid Investing realistically applicable concept that WILL make you some money. Of course, there’s more to it, but I hope this clarifies the concept a little bit better and makes you believe in its viability at least one notch more.