Stock to PM's

Item (1) is irrelevant as it doesn't address what I stated. Item (2) Nobody cares about your guesses on what others might do in the future with their investments. I find it nonsensical that you even spend time on such a thing.

 

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Sorry but that is simply impossible. Any physical asset has a risk of loss. There is no way around it. Even if you don't PAY for your insurance, then you are effectively self insuring. If someone broke in, or heaven forbid, did a home invasion, this gold can be taken from you. This fact of life is true however you physically hold any asset, so therefor a cost that must be factored in to returns.

I never said PM was not the preferable method of holding commodities, since they do not spoil, and are concentrated enough to allow significant value to be contained in a small space. I agree they are well suited for the purpose. However, this does not eliminate the ability for them, like any physical asset, to be able to be taken from you physically.

Anyone who says, "it doesn't cost me anything to hold PM" is simply not accoutning for this risk. I hope you get lucky in life Fatima and do not have anything bad happen, but tell that to someone who has a breakin to their home, or even have SDB, (which are not insured by the bank), robbed. While physically holding PM has advantages, there are also distinct disadvantages. These security concerns were actually one of the main reasons paper PM was invented.

 

People will also tell you they made lots of money at stocks when they really didn't. Nobody brags about losses. In other words, what people say about themselves is completely irrelevant. It's just like looking at historical stock market graphs and assuming the future holds the same. It's a violation of this very simple investing principle:

[highlight]"Past performance does not indicate future performance"[/highlight]

It continues to amaze me how many arguments get presented here, which ignores this.

On you second point, it ignores, yet again, that people can no longer judge risk of the stock market. There is absolutely no way to calculate intrinsic value (if there is even such a thing, i.e. its gibberish) when the faith in the stock system has been destroyed. The small investor is completely exposed to the whims of the government, the banksters, wall streeters who walk off with assets, and all the other things said above. If one feels they are to engage the stock market then their evaluation absolutely must include the effect of these items, else they are simply delusional. Sensible people don't even try.

 

You know, I wish more people believed this. You sharing here that this is your belief makes me feel much better about the stock market than I did before. The tried and true rule of stocks is the worst the public sentiment is towards them, the better they will perform in the near term. In fact, if you believed that stocks were a great buy right now would have had me very nervous about equities. In fact, if anyone else wants to cheer Chris up, please also post about how equities are scams, the devil, ripoffs, whatever. Its all music to my ears.

Its your BELIEF that there is no way of trusting or calculating the intrinsic worth of the stock market. That's fine, everyone is allowed their own beliefs, and I hope you do well in your investments. I simply disagree, and we shall see when we both retire who was correct. No sense arguing about it now.

Chris

 

Rather to address the point made, you choose instead to make the issue about me. This is a tactic used when one can't come up with a logical argument. What I have posted are simple facts. Anyone can go and look up what has happened with MF Global, anyone can go and look at the complete lack of enforcement of existing rules and regulations, anyone can go and look up that BAC, for example lied about their balance sheet, anyone can go and lookup any host of items that make it impossible to judge risk. Maybe you feel different, but I want to know about ALL the risks when I make an investment.

It's been said over and over to do the due diligence about any investment. What I have posted is part of that due diligence because the stock market ONLY exists if rules and regulations are being enforced fairly. The prudent investor can either choose to look into it or stick their head in the sand and simply keep repeating "stocks are good, stocks are good, etc etc". If they do look into it, and feel they can live with it then fine that is their decision. That isn't the point. The point being made by me and others in this topic is that because of what has happened, TODAY's stock market is not the one from decades past and this nonsense about "stocks have been historically good" is worthless advice moving forward.

One more time.

[highlight]Past performance is not an indicator of future gains[/highlight]

 

[1] It disproves what you stated since I never said what you attributed to me.

[2] If you don't care, don't post. I'm only going by what you said you planned to do.

 

There is no "fact" that Financial Statement are less trustworthy today Fatima. Look at previous bad financial periods and you will see many more companies went bankrupt then. Do you care to even discuss why Cash Flow statement was created? Do you know why? Standards evolve over time, and I stand by my statement they have never been so tight as today. People can believe someone not involved in corporate American accounting, (Fatima), or someone who is. Its their choice, and no amount of post twisting will change that. Again, I am very happy you are so biased against equities, and hope more of the general public takes up your point of view. No one on CoinTalk, of course, but everyone else.

Btw, while past performance is not an indicator of future gains is true, its also foolhardy to ignore a century of solid return comparisons. Feel free to do so, I am not telling anyone to invest in anything they are uncomfortable with.

 

Fair points, and I can definitely agree that price is not necessarily value. It is just one way to measure it, and you can measure value in many different ways. Price is just a small window into that, however if you can buy or sell something for X dollars then X is its value in that particular instance, whether or not it accurately measures the intrinsic or implied value.

However I still do not agree that price equals sentiment. The price could be anything. You have to know all the underlying factors and history to determine sentiment. Whether something is $1 or $1,000,000 it means nothing other than cost until you put it into perspective.

 

Inflexion, maybe this little Warren Buffett story will help.

Think of the market as a man in a little top hat called "Mr. Market". Every day Mr. market comes to you and offers to buy and sell stocks to you. Some days he's in a great mood, and wants a fortune for his shares, but will pay a high price for yours. Other days he is in a miserable mood, the sky is falling, and he won't pay much for your shares, but will sell you his cheap. Now, feel free to take advantage of Mr. Market, buy from him when he is in a bad mood, and sell when he is in a good mood, but NEVER try to guess how Mr. Market will feel tomorrow.

The point being Mr. Market has sentiment, and is almost always an overreaction to current news. The biggest mistake most people make is guessing where his sentiment will be next week, or tomorrow, or even in 2 hours. There is no way of knowing. Now, there CAN be calculated an intrinsic value to a stock, and if its correct eventually the market will reflect that value. That is what Cloud is referring to.

Chris

 

One more time. When companies lie about these statements, you can't judge the risk. We have a very long argument here 6 months ago by where you guys made this same argument specifically about BAC. The claim was that it had a strong financial sheet and as proof of that Warren Buffet invested in it. Yet after that, BAC came out and said they lied. They admitted to secret payments from the FR. The stock dropped through the floor. Nobody has been prosecuted or even fired from the bank and they are paying out bonuses again. In short, the very example given as proof failed and you guys ignore this now. i.e. You were unable to judge the risk. The proof is in the pudding if you ask me.

Calling me biased doesn't address the points made. I wish you wouldn't keep going there.

 

Makes sense, and I do agree with Cloud's thoughts on stock valuation, but I'm not referring to identifying future sentiment, rather current sentiment. Without knowing what the price was at any other time than the present there's no way to infer what mood Mr. Market is in based solely on the current price. That requires additional info, such as seeing him waving his arms or something or previous price action, or understanding of stock valuation methodology.

 

Well the other point is long term the market WILL recognize the value, yet short term may seriously over or under value an asset. This works for all assets, its the same methodology why I bought silver. I thought it too cheap and likely to increase. I had to wait 20 years, but now its much higher. Stocks are the same, just harder to judge what you believe the true worth is. I never said it was easy as PM investing, but the exact same thoughts go into it, is the market not recognizing value, or is it way too high and it will go down.

Current sentiment to me, is PM is fairly priced to a touch high, bonds are overvalued, (some drastically), and some stocks a good long term value. Just my opinion, and I could be dead wrong. I am betting on my beliefs with my own money though, just like I did in the early 90's buying silver when everyone else was calling me a fool.

 

about a third of existing house sales are to investors these days- not flippers but landlords. It is not impossible to have a piti payment of $350 and rent the house out for $950 - I know that there are other expenses but still.... Anyway there are a lot of families that need houses right now (because of foreclosure and walk aways) and they are ready to rent. Metals are historically high right now- sure they may go higher- but I do not buy when things are at historic highs.

 

Well you are certainly not a fool, Chris. It must feel vindicating to have seen what silver did since then, whether or not you're still in touch with anybody from back then who disagreed with you.

I agree with you on both stocks and bonds. My concern with stocks is not the value of the companies, but the integrity of the market. Of course I differ on precious metals, more so silver than gold, simply due to its limited physical supply and necessity for technological advancement. I think even if we have deflation and gold drops due to monetary supply contraction that silver will still be leaps and bounds ahead of where it is now in a few years, in part because I think the value today should be closer to ~$500/oz, but that it will require a physical shortage for silver to reach what I perceive to be its real value. I base that loose estimate on the likelihood of a physical shortage so they go hand in hand. I realize I am in the minority here, and I could very well be wrong =) but I have done more research on silver than anything else and am comfortable enough with my assessment to buy at any price I've seen so far.

 

Gold isn't at a historic high. The inflation adjusted peak for gold is ~$2400.

I readily admit that all housing is local, but in general there is a 24 month excess supply of homes, a huge amount of shadow inventory, and people in homes who are being foreclosed on and/or can't make the payment. If that wasn't bad enough, the government and banksters are back to making questionable loans so builders are still putting them up. Most concerning for this market, the workforce is shrinking along with household income.

As I said, real estate is local, but in general, this is still a market with a considerable amount of downside.

 

...not to mention that, beginning in 2013, a 3.8% sales tax is imposed on certain home sales in support of the "Affordable Healthcare Act".

http://www.factcheck.org/2010/04/a-38-percent-sales-tax-on-your-home/

Don't forget...Federal Income Tax began with a top rate of 6% for only those earning over $500,000 (in 1913 money). Liberal "Progressives" put you in warm water...the slowly turn up the heat until you're ready to eat.

Wait! Wait!...

Two hunters are captured by a tribe of Cannibals...
They're tied up and put in a big pot over a flame.
They both panic..."HELP!! HELP!!"

After a while...as the water becomes warmer...one of the hunters begins to smile...then laugh!
His buddy asks, "Hey! we're gonna DIE! Why are you laughing?"
The laughing hunter confides, "I just pee'ed in their soup!"

 

"near" all time highs- I really do not go with that "inflation adjusted" jive. As for houses- you are right about shadow inventory and such but soooo many families need a decent place that is not that hard to find renters (but again that is local).

 

Do you consider inflation's effect on housing's prices?

 

the fact that housing prices are lower now seems to indicate that there is no inflation but deflation (at least in this sector)

 

We didn't talk about the kind of inflation/deflation. I am talking about monetary inflation/deflation. This is caused by the increase or decrease of the money supply. It's important to distinguish this because how one reacts to housing prices as an investor depends upon if the price is changing due to that issue, or rather, the price is changing to to some other factor such as demand, lack of income, something local like a new garbage dump or road, which is depressing prices.

You first have to eliminate the effects of money printing/retraction. So if the prudent real estate investor recognizes and takes that step, then realizing that gold is considered a currency exchange with the dollar, then they also have to consider that inflation affects it's price too. (Especially for anyone taking the time to have a discussion on a bullion forum) So given that, gold is a long way from it's historic high. Based on that fact alone, there is a 41% upside to gold pricing. However I don't think one can say the same about real estate in general. IMO, prices, in general, are headed back to the mid-1980s levels and in many cases, places will have to be torn down because there are no buyers.