Patrick Karim: Separating Peak Stupid from the Valley of Despair
Tom welcomes Patrick Karim back to the show for a mostly chart-less chat.
Patrick and Tom discuss the manipulation of metals and the Dunning-Kruger effect. It’s important to keep an open mind even when your stock moves up your thesis may still be wrong. It’s important to learn from those with experience to avoid giving back all your profits.
Patrick discusses charting and usage of technical analysis to determine when a bear market could occur. Ratio charts are excellent for determining overall market direction. Most equities are near extremes and carry a lot of potential downside risk. If you watch the inflation-adjusted dollar chart it may help you to determine where gold is heading.
A lot of capital is headed for sexier markets but eventually, there will be a return to safe-haven assets like gold. Mining shares have been one of the worst investments since 1996 but therein lays the opportunity.
As investors, we should be looking for opportunities and not focus solely on our favorite narrative. The weight of evidence is in gold’s favor but we should always consider other investments. There is a lot of liquidity in the markets and it seems important to capture some of it for yourself. If you focus on a particular asset you will miss out on other opportunities.
Patrick discusses techniques for exiting a position based on height above the one-year moving average. Be careful of over-thinking past performance since it may not continue. Consider scaling out of positions once you’ve seen good profits and when the chart is looking overstretched.
The macro tidal waves that are driving market cycles create long-term meaningful moves. Examining ten-year trading patterns will give you the perspective of where you are in the macro picture. Always be mindful of your emotional state.
Patrick believes gold is near where it should be but silver is still lagging. A spike high on a silver chart may not be that meaningful. Silver has never closed above $31 on a yearly chart. Silver is now near its fifty-year high and we can expect a parabolic rise soon.
Lastly, they discuss the frustration levels with gold and the steadily increasing risks in the crypto space.
Time Stamp References:
0:00 – Introduction
1:59 – Manipulation
3:12 – Dunning Kruger Effect
5:34 – T.A. & Bear Markets
9:54 – Chauffeur Knowledge
12:30 – Entry Points & Risk
15:15 Dollar & Inflation
18:00 – Capital Flows
19:48 – Finding Opportunity
25:14 – Profit-Taking
29:32 – Market Cycles
33:04 – Bottom Picking
34:57 – Targets & Timeframes
38:12 – Volume & Resistance
40:15 – Charts & Probabilities
42:37 – Silver Rocketships
45:00 – Adjusting for Inflation
47:21 – Art of Thinking Clearly
50:27 – Gold Frustrations
51:10 – Bitcoin Thoughts
53:00 – Wrap Up
Talking Points From This Episode
- The Dunning Kruger Effect and risk of investor over-confidence.
- Evaluating market cycles and overall risks.
- Finding opportunities and timing long-term market cycles.
- Expectations for silver and bitcoin.
Patrick Karim is a proprietary capital manager and chart trader since 2006. Patrick’s background in commerce, psychology, and an ongoing career in systems engineering has allowed him to evaluate trading scenarios systematically.
His psychology background helps him understand the human factor: overcoming stress, which is mostly responsible for maintaining a successful career.