David Keller: Big Base Breakout for Gold is Here

David discusses his early career start at Bloomberg in March of 2000. That job taught him a lot about market psychology and in 2008 he was hired at Fidelity as a managing director of research. For the last couple of years, he has been running his research firm called Sierra Alpha Research.

As humans, we want certainty in our decision making and investors like to believe that experts exist that know what will happen. In reality, this is not likely to be the case. Investors and experts tend to be wrong around half of the time. The game is to recognize when you have an incorrect position. Most people take a position and then worry about the risks when things start going wrong.

A thoughtful investor uses the macro factors but watches the price action for signals. With gold currently, you have to remember you are playing within a fairly bullish trend. Gold is now in a big-base breakout and the price is now being re-defined likely much higher.

He is a big fan of investors like Charlie Munger who take a multi-disciplinary approach and that can make you a more well-rounded investor. Situational awareness is the idea of knowing what is going on around you. As investors, we so often have our heads down and are focused on a particular trade or market and forget that it is all part of a much larger machine.

You should start every morning with an examination of the broader long-term framework. You need to know what are you trying to accomplish as an investor. If your goals are aligned you will be more successful.

Time Stamp References:
0:40 – Davids initiation into investing.
3:10 – Why investors and experts are often wrong.
6:00 – Price action and the macro picture for gold.
10:00 – Multi-disciplinary process for investing.
14:00 – The importance of situational awareness.
15:00 – Contrarian indicators and media hype.
17:00 – Euphoria and when markets run out of investors.

Talking Points From This Week’s Episode
• Investors and experts are usually wrong half the time.
• Question your thesis and be ready to change.
• Optimistic markets can become exhausted.
• Investors like pilots need situational awareness.
• Question how much higher stock markets can reach.

David Keller, CMT is President and Chief Strategist at Sierra Alpha Research LLC, a boutique investment research firm focused on managing risk through market awareness. He combines the strengths of technical analysis, behavioral finance, and data visualization to identify investment opportunities and enrich relationships between advisors and clients.

David was previously a Managing Director of Research for Fidelity Investments in Boston, where he managed the Technical Research Department as well as the legendary Fidelity Chart Room. He also co-managed the Business Associate Program, a rotational program for recent undergraduates.

A Past President of the Chartered Market Technician (CMT) Association, David most recently served as a Subject Matter Expert for Behavioral Finance. He is also a member of the American Association of Professional Technical Analysts and the International Federation of Technical Analysts. He has lectured on technical analysis and behavioral finance as an Adjunct Professor at the Brandeis University International Business School in Waltham, Mass.

David was formerly a Technical Analysis Application Specialist with Bloomberg L.P. in New York and was a regular contributor to Bloomberg Markets magazine. He is the editor of the book “Breakthroughs in Technical Analysis: New Thinking from the World’s Top Minds”, published in August 2007 by Bloomberg Press.

David is a classically trained musician and student pilot and resides in Avon, Ohio with his wife and two children. He received degrees in Music and Psychology from The Ohio State University.

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