Precious metals and crude oil are both far more likely to rise than fall.

Just because you believe something has fallen as low as it can go doesn't mean it can immediately start rising. And if it can't rise right away, who knows how long you'd have to wait?

When you enter the market, your biggest headache is not knowing when the price will start to climb. What you do know is that you have costs—specifically, the cost of capital.

Let's break down investors into three tiers based on their investable funds: under 500, 500–5,000, and above 5,000—call them Tier A, B, and C. If someone in Tier A believes in the long-term potential of an asset, do they necessarily have the means to act on it? Not necessarily. Without leverage, profits are razor-thin; with leverage, however, there's a cost to holding the position.

Take a traditional courtyard house (siheyuan) inside the Second Ring Road in Beijing. Long-term, its price will undoubtedly appreciate. But here's the catch: if your available capital is less than 500 and you don't take out a loan, how do you buy it? And if you do borrow, you'll have to pay interest—that's leverage, and that interest is your cost of capital.

For someone bearing the cost of capital, what matters isn't a favorable price level—it's timing. A low entry price is useless if the asset ranges sideways for three to five years before resuming its uptrend. Can they afford to keep paying interest that long? They can't. They simply can't hold on.

The hardest part is that you never know how long you'll have to endure it—is it a year? Two? Three? Five?