This may be only the second or third time I’ve agreed with Rainjack in the last six or seven years.
Investing in gold is like investing in comic books. I know a lot of people who invest in both, and neither have made any money. But there are a few who actually do, but they really understand that specific market. (And better then anyone I have heard here.)
I prefer investing in mutual funds, at least until I have enough to purchase individual stocks. And that would only be when they are no more then 5% of my stock portfolio. Make a mistake, buy something that for some reason drops like a rock, or goes bankrupt, and you can only lose 5% of your portfolio.
The best brain dead investing strategy there is, is S&P 500 funds. Averaged ~12% over the last century, and very little in the way of expenses. When people talk about trying to beat the market, this is the market they are trying to beat, and most of them don’t.
Intelligent real estate and single stock investing both require some time and work. But can be well worth it.
[quote]The Mage wrote:
Investing in gold is like investing in comic books. I know a lot of people who invest in both, and neither have made any money. But there are a few who actually do, but they really understand that specific market.[/quote]
People do not buy gold to build wealth but rather to protect their wealth from inflation. Gold is relatively stable. For proof that gold holds its value better than paper just look up the prices of various commodities in terms of gold.
If one wants to increase their wealth they would invest in actual productive means. The fact that the people who lambaste “gold bugs” cannot see the distinction between wealth building and wealth preserving is laughable.
[quote]LIFTICVSMAXIMVS wrote:
The Mage wrote:
Investing in gold is like investing in comic books. I know a lot of people who invest in both, and neither have made any money. But there are a few who actually do, but they really understand that specific market.
People do not buy gold to build wealth but rather to protect their wealth from inflation. Gold is relatively stable. For proof that gold holds its value better than paper just look up the prices of various commodities in terms of gold.
If one wants to increase their wealth they would invest in actual productive means. The fact that the people who lambaste “gold bugs” cannot see the distinction between wealth building and wealth preserving is laughable.
[/quote]
Gold investors are pessimists who see death and destruction at every turn.
An ounce of gold purchased in 1978 would be worth the same in dollars today. Factor in inflation, and that hedge investment just cost some little old lady about $600 in inflation adjusted dollars.
[quote]rainjack wrote:
An ounce of gold purchased in 1978 would be worth the same in dollars today. Factor in inflation, and that hedge investment just cost some little old lady about $600 in inflation adjusted dollars. [/quote]
The price of gold in dollars is irrelevant. What matters is how much a certain weight of gold one can trade for a loaf of bread, for example. I am pretty certain in terms of dollars the gold holder always gets a better price. The fact of the matter is had the US not gone off the gold standard in the first place the little old lady would need not worry about inflation.
[quote]LIFTICVSMAXIMVS wrote:
rainjack wrote:
An ounce of gold purchased in 1978 would be worth the same in dollars today. Factor in inflation, and that hedge investment just cost some little old lady about $600 in inflation adjusted dollars.
The price of gold in dollars is irrelevant. What matters is how much a certain weight of gold one can trade for a loaf of bread, for example. I am pretty certain in terms of dollars the gold holder always gets a better price. The fact of the matter is had the US not gone off the gold standard in the first place the little old lady would need not worry about inflation.[/quote]
You just keep thinking that the price in dollars is irrelevant. Please. We need idiots like you in the market.
Wait. You’re not in the market, are you? You just talk shit, and have none of your money where your mouth is.
[quote]rainjack wrote:
You just keep thinking that the price in dollars is irrelevant. Please. We need idiots like you in the market.
Wait. You’re not in the market, are you? You just talk shit, and have none of your money where your mouth is.
[/quote]
Actually all of my money is where my mouth is. I am paying off all of my debt while the dollar is weak.
I think it’s worth pointing out there is a difference between “gold bugs” who are eternal gloom & doomers and those who invest in gold at select times. The gloom & doomers are always invested in gold as they expect the worse economic scenario to play out very soon. The select investors are those who seek alternatives or safe havens when the market is dong bad.
Right now the S&P 500 is both overvalued AND in a down trend. In addition, we have the chaos in the financial sector and high energy costs. These factors make it completely reasonable to seek alternatives for our money.
[quote]on edge wrote:
I think it’s worth pointing out there is a difference between “gold bugs” who are eternal gloom & doomers and those who invest in gold at select times. The gloom & doomers are always invested in gold as they expect the worse economic scenario to play out very soon. The select investors are those who seek alternatives or safe havens when the market is dong bad.
Right now the S&P 500 is both overvalued AND in a down trend. In addition, we have the chaos in the financial sector and high energy costs. These factors make it completely reasonable to seek alternatives for our money.[/quote]
Which is precisely why gold shot up yesterday. You have at least two people in this thread that have been preaching gold for the last couple of years. I am talking specifically about them.
In fact, if you had read my last post - I make the very distinction you are making.
[quote]The Mage wrote:
Investing in gold is like investing in comic books. I know a lot of people who invest in both, and neither have made any money. But there are a few who actually do, but they really understand that specific market. (And better then anyone I have heard here.)
I prefer investing in mutual funds, at least until I have enough to purchase individual stocks. And that would only be when they are no more then 5% of my stock portfolio. Make a mistake, buy something that for some reason drops like a rock, or goes bankrupt, and you can only lose 5% of your portfolio.
The best brain dead investing strategy there is, is S&P 500 funds. Averaged ~12% over the last century, and very little in the way of expenses. When people talk about trying to beat the market, this is the market they are trying to beat, and most of them don’t.
Intelligent real estate and single stock investing both require some time and work. But can be well worth it.[/quote]
Peak to peak the S&P 500 isn’t always so great. If you invested in the S&P 500 in 2000 and held it 8 years, the only thing you made was the dividend, which, off the top of my head, is about 2 percent.
This last post?
[quote]rainjack wrote:
You just keep thinking that the price in dollars is irrelevant. Please. We need idiots like you in the market.
Wait. You’re not in the market, are you? You just talk shit, and have none of your money where your mouth is.
[/quote]
[quote]rainjack wrote:
I am still learning. But I read about how Warren Buffet invested, and I also read as much as I could about dividend investing. [/quote]
On that subject, although Buffett doesn’t think much of gold as a store of value, it’s pretty clear he doesn’t think much of the dollar, either. I think Berkshire Hathaway has made more money betting against the dollar in recent years than betting on it.
And Buffett seems less antagonistic toward other precious metals. I remember back in 1997, I was buying a fair amount of silver at about $5 an ounce, and was mildly pleased to find that Warren Buffett was doing the same, to the tune of about 130 million ounces.
Of course, he sold that pile a few years ago for less money than he probably should have, by his own admission. Which only proves that even oracles are not infallible.
But he still has more money than I do, so I can’t criticize him too much.
[quote]on edge wrote:
This last post?
rainjack wrote:
You just keep thinking that the price in dollars is irrelevant. Please. We need idiots like you in the market.
Wait. You’re not in the market, are you? You just talk shit, and have none of your money where your mouth is.
[/quote]
That’s my fault. I thought I posted about that - but evidently I erased what I said before I hit the submit button.
Sorry.
[quote]Varqanir wrote:
rainjack wrote:
I am still learning. But I read about how Warren Buffet invested, and I also read as much as I could about dividend investing.
On that subject, although Buffett doesn’t think much of gold as a store of value, it’s pretty clear he doesn’t think much of the dollar, either. I think Berkshire Hathaway has made more money betting against the dollar in recent years than betting on it.
And Buffett seems less antagonistic toward other precious metals. I remember back in 1997, I was buying a fair amount of silver at about $5 an ounce, and was mildly pleased to find that Warren Buffett was doing the same, to the tune of about 130 million ounces.
Of course, he sold that pile a few years ago for less money than he probably should have, by his own admission. Which only proves that even oracles are not infallible.
But he still has more money than I do, so I can’t criticize him too much. [/quote]
He’s certainly not afraid to buy up foreign companies. I guess you could call that betting against the dollar.
[quote]Zap Branigan wrote:
rainjack wrote:
People who worship at the alter of gold are the pessimists who see death and destruction at every turn,or eternal bears.
Well said.[/quote]
“Over the course of 600 years, five dynasties had implemented paper money and all five made frequent use of the printing press to solve problems. Economic catastrophe and political chaos inevitably followed. Time and again, officials looked to paper money for instant liquidity and the immediate transfer of wealth. But its ostensible virtues could not withstand its tragic legacy: those who held it as a store of value found that in time all they held were worthless pieces of paper.”
Fiat Paper Money, The History and Evolution of Our Currency , Ralph T. Foster 2 nd ed 2008, page 29
[quote]on edge wrote:
Peak to peak the S&P 500 isn’t always so great. If you invested in the S&P 500 in 2000 and held it 8 years, the only thing you made was the dividend, which, off the top of my head, is about 2 percent. [/quote]
And what has it done compared to 10, or 6 years ago?
You are comparing a peak to a valley. Yes, it is easy to say how bad it is when you get to choose the start date and the end date. If you dollar cost averaged over this time, you would have done fine. Plus with the market down right now, it is actually a great time to put your money into the market.
This is a long term strategy based on buy and hold, not day trading. It only requires patience.
Now if your talking about “day trading”, the chart says to hold off before putting money into it right now, until the trend changes.
But it is concepts like this, looking at todays price and thinking that matters, that causes people to lose money.
[quote]The Mage wrote:
And what has it done compared to 10, or 6 years ago?
[/quote]
Lost most of its value to inflation…?
[quote]AynRandLuvr wrote:
Zap Branigan wrote:
rainjack wrote:
People who worship at the alter of gold are the pessimists who see death and destruction at every turn,or eternal bears.
Well said.
“Over the course of 600 years, five dynasties had implemented paper money and all five made frequent use of the printing press to solve problems. Economic catastrophe and political chaos inevitably followed. Time and again, officials looked to paper money for instant liquidity and the immediate transfer of wealth. But its ostensible virtues could not withstand its tragic legacy: those who held it as a store of value found that in time all they held were worthless pieces of paper.”
Fiat Paper Money, The History and Evolution of Our Currency , Ralph T. Foster 2 nd ed 2008, page 29
[/quote]
Good thing all the dynasties that use gold currency are still around…
[quote]The Mage wrote:
on edge wrote:
Peak to peak the S&P 500 isn’t always so great. If you invested in the S&P 500 in 2000 and held it 8 years, the only thing you made was the dividend, which, off the top of my head, is about 2 percent.
And what has it done compared to 10, or 6 years ago?
You are comparing a peak to a valley. Yes, it is easy to say how bad it is when you get to choose the start date and the end date. If you dollar cost averaged over this time, you would have done fine. Plus with the market down right now, it is actually a great time to put your money into the market.
This is a long term strategy based on buy and hold, not day trading. It only requires patience.
Now if your talking about “day trading”, the chart says to hold off before putting money into it right now, until the trend changes.
But it is concepts like this, looking at todays price and thinking that matters, that causes people to lose money.[/quote]
Do you have a sign on you back that says “kick me”? Because you’re making yourself to be a big punching bag.
No, I was clearly comparing peak to peak not peak to valley. Peak to valley comparisons would be quite sobering, though.
Ten years the S&P has gone from 1000 to 1200. That sucks Figure ones investment life is about 30 years. That ten years practically wasted. Six years, 900 to 1200. That’s a meek “ok”. I could take it but not be thrilled.
Dollar cost averaging over this time really hasn’t done you that well,either. Probably around the ten year result.
You say “with the market down right now” like this may be a valley. If you are right, we should be throwing our money at the market. However, it is more likely we are just coming off a major peak. If history is any indicator, this down trend in stock values will continue for at least another year.
I’m saving cash, buying foreign bond funds, probably will be buying gold and, when the market gets extremely oversold like it was midweek last week, I will take some pot shots at it by buying volatile index funds and hopefully selling them with in a few weeks. I sold what I bought last week in a day and a half. The less time to get blind sided by bad news, the better.
I also put lots of money in this very safe fund; HSGFX. You young guys who really aren’t sure what to do with your investment money HSGFX. Those of you who really believe in dollar cost averaging ---->HSGFX<-----.
Mage, based on your comments above, please consider HSGFX.
[quote]on edge wrote:
Do you have a sign on you back that says “kick me”? Because you’re making yourself to be a big punching bag.[/quote]
Wow, that is like, such a stupid comment. Thanks for bringing that level of intelligence to this conversation.
When you get to choose your time frame, of course it will look exactly how you want it to. September 1993 to September 2000 it was up 212%. Pick October 2002 to October 2007, you have an 87% return.[quote]
Ten years the S&P has gone from 1000 to 1200. That sucks Figure ones investment life is about 30 years. That ten years practically wasted. Six years, 900 to 1200. That’s a meek “ok”. I could take it but not be thrilled.[/quote]
I wasn’t calling this some wonderful exciting investment. Spend 10 years building through dollar cost averaging, then when it does go up, which it will, you will make the profit. Give it the 30 years, and it will do fine.
I am not calling this the great sophisticated investment. It is simply the starting point of a core buy and hold strategy.[quote]
Dollar cost averaging over this time really hasn’t done you that well,either. Probably around the ten year result.[/quote]
It’s actually surprising at how well it actually works. Boring, but works.[quote]
You say “with the market down right now” like this may be a valley. If you are right, we should be throwing our money at the market. However, it is more likely we are just coming off a major peak. If history is any indicator, this down trend in stock values will continue for at least another year. [/quote]
We have entered the valley, in November of 2007, but it has not bottomed out. You can either buy on the way down, or wait until it bottoms out. I am not psychic, so I cannot say when that bottom will occur. But a chart will often show when it has happened, and a person can respond to it.
So basically you are a day trader. No problem with that, as long as you know what your doing. (And at least 90% of the day traders don’t) Too many fall for the gambling nature involved, so it draws in a lot of compulsive gamblers who call themselves investors.[quote]
I also put lots of money in this very safe fund; HSGFX. You young guys who really aren’t sure what to do with your investment money HSGFX. Those of you who really believe in dollar cost averaging ---->HSGFX<-----.
Mage, based on your comments above, please consider HSGFX.[/quote]
Looks like an interesting fund. But the S&P has beat it over the last 5 years, so I don’t see the point.