Читать книгу Investing in Gold & Silver For Dummies - Paul Mladjenovic, Paul Mladjenovic, Ted Sudol - Страница 49

The more you understand how markets work, the better decisions you’ll make and the more you’ll minimize risk in your financial situation. I remember getting into options on silver futures some years ago. It was early 2004, silver was rising very well, and my account was performing superbly. I thought to myself, “Gee! What a genius I am!” Then along came April 2004. Silver plummeted by nearly 40 percent. I thought to myself, “Gee! What a moron I am!” In retrospect, it worked out just fine, and I made some great profits, but I was sweating bullets that spring. Seeing the value of your “investment” drop by 40 percent can make you freak out. I would have jumped out the window, but I’m on the first floor. The point is that I learned that precious metals futures and options could have very wide and scary price swings. That is the nature of the market.

In fact, it isn’t uncommon for precious metals to “correct” by 20 to30 percent or even more at least once a year (I’ve come to learn that a “correction” seems awfully incorrect at the time). The terms correct or correction mean that a market came back down after going up too far and/or too fast. Don’t confuse a market “correcting” with a market experiencing a bear market — a long-term falling or decreasing market. The correction is a temporary pullback in the price of the asset that is in a long-term bull market, or rising market. In other words, the difference between a correction and a bear market is the same difference as fainting and dropping dead. In the former, you recover and get back on track. The point is that gaining knowledge about your market helps you understand moments such as the difference between a correction and a bear market.