investment, the more trend information you need. Many people bought high and now are faced with selling low. An astute investor knows how to follow trends in order to buy low and sell high.
The Financial Bird of Prey Every time I see developers’ construction cranes sitting on high-rise condos I know the end of the trend is near. Whenever you see construction cranes, a.k.a. birds of prey, sitting on the skyline, you know the boom is about to bust. It means that the cycle has peaked, and, generally, there is nowhere to go but down. The next time you see more than two construction cranes on the skyline, start selling any piece of real estate you do not want.
History and Cycles A final thought on trends is the importance of history and cycles. Having survived a number of up and down markets, I have learned a lot from history. There is one historical financial trend I believe is worth watching. That trend is the twenty-year cycle between stocks and commodities. As a person who sailed for an oil company and flew helicopters in search of gold, I became curious about why the prices of commodities went up as stock prices came down. A few years ago, I came across a book written by one of my favorite financial authors, Jim Rogers, entitled Hot Commodities. Rogers discovered that stock prices went up for twenty years at the same time as commodity prices came down. For example, from 1960 to 1980, just as I was coming of age, commodity prices such as oil and gold were rising. In 1980, oil, gold, silver, and real estate prices came down rapidly as stock prices started climbing. Between 1980 and 2000, the stock market was the place to be, and oil, gold, and silver were dogs. While the commodity market was down, I was buying all the oil, gold, silver, and real estate I could. On schedule, in 2000, at the height of the dotcom boom, share prices dropped and commodity prices came roaring back up. If history repeats, this means that commodities will come down in 2020 and stocks will be the market to be in again. Obviously, I do not have a crystal ball. But history does seem to repeat, and I am old enough to have seen some reruns. If you would like more information on how a world-class investor such as Jim Rogers analyzes trends, I recommend you read Hot Commodities, or any other book he has written. He is a brilliant investor and writer who is an astute observer of trends. Always remember, “The trend is your friend.� If you ignore the trend, the birds of prey will pick your bones clean.
In Conclusion Ultimately, it is not the asset that makes you rich. Information makes you rich . . . or poor. For example, if I had bought gold at $800 an ounce in 1979, I would still be waiting to make my money back today. Given how much the dollar has dropped in purchasing power, that means I would have to