Our advice at the beginning of last year was the same as the advice we gave the year before...and the year before that:

"Buy gold."

Happily, gold was the year's top performing sector, for which we claim no distinction nor ask for any thanks. We have only one virtue here at The Daily Reckoning headquarters: humility. And we are even insincere about that. But even false modesty is a great advantage in the forecasting business...that, and not watching television.

Nobody knows what will happen. The worst thing you can do is to listen to other forecasters. The New Year brings them out like a new moon brings out werewolves. All tend to howl the same thing: next year will be more or less like the last. How do they know? They read it in the paper!

If you follow the consensus view, you are doomed to mediocrity. You will make the same investments everyone else makes and get the same returns that everyone else gets. That is not only a dull and cowardly way to do things, it practically guarantees that you will eventually be looking for coins under cushions and asking your brother-in-law for a loan. Over time, the great mass of investors loses money. Every bull market is followed by a bear market. Every bubble pops. Every great company fails. G.M. lost half its value last year. Fannie Mae fell 31%. The typical investor merely goes along; he follows the trends up, and back down. All the while he is paying Wall Street's costs. For long periods of time, he thinks he is smart. The last bull trend in stocks began in 1982. It lasted for 18 years. All an investor had to do was to follow the consensus view and buy stocks 'for the long run.' Even now, five years after the peak, he still thinks he will get rich in stocks if he waits long enough. But the typical bear market lasts about as long as the bull market that preceded it. And it wipes out most or all of the gain. By the time it is finally over - perhaps in 2015 - the Dow will probably be back below 5,000 and the average investor will be underwater, because he bought when the newspapers, experts and forecasters told him to: when the Dow was over 5,000.

The big opportunities - and big dangers - are all at the turning points. When the Dow turns down, for example, it is time to sell. When gold begins to take off, it is time to buy. But these turning points - these major market shifts - are never foreseen by the forecasters. They are 'discontinuities.' That is, they are breaks in the visible and usual patterns. You cannot see them coming by looking at what happened last year or the year before. You cannot predict them by guessing that things, next year, will be more or less as they were the last. They are the very time when things will not be as they have been.

They are the points at which new trends begin.

We are too ornery to follow the crowd, and too modest to think we know what the year ahead will bring. The best we can do is to follow hunches, instincts and old-fashioned theories. 'You get what you've got coming,' is one of them. 'Buy low, sell high' is another.

At $10 a barrel, they were practically giving away oil a few years ago. It hit $70 a barrel on September 1, 2005. Now it is around $60. Stocks were selling at only six times earnings in 1982; they were practically giving them away. Likewise, gold was so cheap in the early '70s - at $41 an ounce
- they were practically giving it away. Whenever people give away something valuable, we take it.

We've never regretted buying at give-away prices. It is what led us to buy buildings in Baltimore in the early 90s, our place in Nicaragua, and more recently, land in Argentina.

By the late 1990's, gold was being given away again at under $300 an ounce. Then, with the Dow near 12,000, we announced our Trade of the Decade: buy gold, sell stocks. Half the decade has now gone by. Gold has doubled. Stocks have not yet broken down. But we will stick with our trade. They are not giving gold away anymore. Still, a major bull market in the yellow metal is underway. We are too humble to make a forecast, but we stay with our Trade of the Decade, just to see how it turns out.

Bill Bonner, back in London with more opinions and thoughts on the New Year...

*** Yesterday, gold traded over $530 an ounce. It is beginning to look as thought we have had our last chance to buy at less than $500.

*** What's the most overvalued property market in America? A new study says it's Naples, Florida, where the typical house sells for $329,000, which is about 80% more than it should be. The median house price should be closer to $180,000 - based on supply, demand, costs, demographics and other factors, says the study.

On the other hand, if you want to live somewhere where property is cheap, move to Texas. The Lone Star State has houses that are under-priced, according to the same study. In El Paso, for example, you can buy a house for nearly 20% less than it is actually worth.

We lived in Mineral Wells, Texas, once. Your editor's father was in the Army at the time; he didn't have a choice. We don't remember much about the place, but from what we've seen since, we don't know if a 20% savings is enough to make it worth moving there. Still, a lot of people seem to like the place.

Bill Bonner is the President of Agora Publishing.  For more on Bill Bonner, visit The Daily Reckoning.