Investing For The Far Off Future

Discussion in 'Bullion Investing' started by brinksta, Jan 26, 2012.

  1. Cloudsweeper99

    Cloudsweeper99 Treasure Hunter

    I've always wondered about the toga story because I've never seen any actual research on the price of clothing in Rome, so I treat it as one of those old sayings that sounds good but probably is made up.

    But with gold $800 in 1980, under $300 a decade ago and over $1,700 now, it demonstrates that, yes, gold will preserve some wealth but only a completely unknown % of it. Since the OP asked about "Investing for the Far Off Future" for a 20 year old, I think they should look someplace else.
     
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  3. Cloudsweeper99

    Cloudsweeper99 Treasure Hunter

    Corporations are flush with cash because they also hold record high levels of debt that must be serviced. Somehow the business media never mentions that. And banks sell mortgages but rarely keep them on their books. They can't give them away because people don't have enough cash flow to service the debt even at those low rates. This isn't really a matter of opinion. It's just a fact that the demand for money figures into whether an increasing supply of money will hurt the value of the dollar.
     
  4. Cloudsweeper99

    Cloudsweeper99 Treasure Hunter

    Amazing. Even when you were flat-out factually wrong, it still proves that you were right in your mind. LOL:rollling:
     
  5. medoraman

    medoraman Supporter! Supporter

    Lol, so I post that I thought BAC was a good buy at the price, yet you are proven right. Boy, no matter what happens you are always right, huh? Gold up, gold down, market up, market down, every circumstance proves your correctness. ;)

    The reason I thought it was a good buy at the time was what I said before, I thought their BS was strong enough to weather the bad news coming out, and if the bad news stops I thought the market would recognize that. Is BAC the stock I wish to make my poster child of stock picks? Heck no. There are many others I own I like a lot more. I just thought BAC was a buy at the price then, and not "horrible" today for long term holding. I have little enough in it I will not want to have to pay the taxes on the gain, and will just hold for a longer term horizon.
     
  6. medoraman

    medoraman Supporter! Supporter

    There could be sir. I like BAC until around $15-18, so am in no hurry to sell. Actually more of my money went into RIO and a couple of others because I think they are better positioned to profit on upbeat economic news. Your REIT makes me a little nervous as to its interest rate sensitivity, and I hadn't had time to study the firm, so I didn't get in on that one. Besides, where I live makes dividends not quite as attractive to me. Darn taxes...
     
  7. InfleXion

    InfleXion Wealth Preserver

    Let's see if I can phrase this appropriately and not have to delete again. What I am wondering is whether the fact that BAC is a member of the ISDA (International Swaps and Derivatives Association) factored into your decision. Since the ISDA is the governing body that determines what constitutes a 'default' for both sovereign nations and financial institutions there is a conflict of interest here in that they will most likely never allow a default to happen. The 5 member banks of the ISDA are the US banks that hold 97% of credit default swaps. If a default is triggered these swaps will be called upon for insurance purposes so it is in the their interest, as dual role owners of these swaps and keymasters to whether the swaps need to fulfill their role, not to declare a default that would decimate their balance sheets. It is only a default if they say it is, regardless of losses. That is why Greece may continue to have haircuts on their bonds, but it will not be declared a default, just like it wasn't at the 50% haircut before since a large portion of the European debt is insured against default by these default swaps.

    Considering all this I can see why BAC stock would be attractive since they control their own destiny within the framework of the current system, however I do not think that it is a safe play to have your money in a company that survives by preventing these credit default swaps from performing the role they were created for, because if they actually had to pony up the money then the counter party risk chain would drag all of these CDS holders under, which are all the too big to fail banks. The potential domino effect because of the risk inherent to this situation makes all paper/electronic assets too dangerous for my liking, and the vulnerability of this paradigm lends credence to the idea that the Federal Reserve will have to come to their rescue with further currency printing at some point in the future. While this may boost stocks, and will definitely boost metals, I don't feel safe with stocks because these markets only function as long as these banks function.
     
  8. medoraman

    medoraman Supporter! Supporter

    I had not really read about it. Are the 5 banks the ONLY members of the ISDA? Are they the only ones allowed to vote on what is a default? Are there international banks as well? You are throwing a conspiracy theory down on the table all laid out without one iota of background information or pertinent information regarding it. Is this conspiracy theory your own idea, or is it from some publication or blog you read?

    Looking it up online its a trade organization that has 820 members from 57 countries. So how does BAC manipulate that? Are you saying the 5 US banks have veto power in this group?

    I am simply asking how much of the details of this conspiracy theory do you REALLY know Inflexion? Have you independently verified any aspect of it? Its easy to read a blogger who wears a tin hat and believe he knows what he is talking about. Not trying to pick on you, but its terribly easy to make assumptions like this. I am not defending BAC if you have any facts, like I said I never wanted them to be my poster child on why to invest in stocks, but I refuse to allow unfounding rumors like this lies without challenge.

    Btw, an industry trade group can only advise within their own membership. They never have the power of a court to legally determine legal issues like "default", which is a legal determination. They may have rules to guide their members, but why would they have one sided rules that hurt half their membership? Why would that membership stay in the trade organization then?

    Chris
     
  9. desertgem

    desertgem Senior Errer Collecktor Supporter

    Inflexion, have you read the info on the ISDA on their website? Here is the list of agencies including the banks that are members. http://www.isda.org/membership/isdamemberslist.pdf. There are 197 primary members and 287 Associate members. The decisions on these CDO and other derivatives as to default, etc., is done by a "DC" as is described below.
    from http://www.isda.org/credit/

    and when you go farther into the events that can trigger the CDO payouts, there are cut off levels and depend on whether a "default" is a direct one rather than a voluntary one. That is why the Greece bondholders had to take a "voluntary" 60%( or there about) to prevent a payout, which many of the European banks ( see list of primary above) would become responsible to pay. IMO, Greece effectively blackmailed them into doing it, and now they say they need more money or they could default! The Greeks know how to play hardball. I imagine German citizens are getting more rebellious. I do not believe that BAC being in the ISDA had anything to do with their increase, as the ISDA is a non-voting member of the various DC. BAC was a depressed stock and Medoraman had the background, brains, and a little luck :) to call it.
    Jim

    edit: I didn't know Chris had posted the above response while Iwaas typing. Don't mean to pile on .
     
  10. InfleXion

    InfleXion Wealth Preserver

    Jim Sinclair went into detail on this subject in a recent Ellis Martin report. So I am going off of what he said. Here is the interview for anyone interested. I have always found him to be a pretty reliable voice in this area, but whether or not that is the case here you may feel free to examine my source.

    http://www.youtube.com/watch?v=9802NwSSS6U
     
  11. medoraman

    medoraman Supporter! Supporter

    I will watch when I get home sir. I didn't mean to be so defensive, I just hate when pundits are quoted as factual statements. I never believe anyone who is a pundit, even if I believe what they are saying, without checking it out myself. This goes for stocks as well as PM investing. Trust only 5% of what you hear, and triple check that much is not a bad saying to live by, especially in this day and age. We have to understand that in the past most news sources had fact checkers that had to be satisfied before something would be published, today great lies like Hitler's types can be dessimated freely. I am not saying this is such a thing, just that today its even more critical to be distrustful of anything you read on the internet, including any posts you read on CT.

    I promise, though, to give my full attention to the interview when I am able.

    Chris

    P.S. Of course Jim, luck in timing for any investment is important. Anyone who claims they are not lucky in some regard in investing are kidding themselves. I am not trying to say "hey look at me I picked a decent stock", because 1) you probably pick better stocks day in day out, and 2) no one cares. It only came up for other reasons in this discussion.
     
  12. InfleXion

    InfleXion Wealth Preserver

    Chris you are totally justified in questioning it, and I should have done more research myself first too. There is no shortage of disinformation out there and I would not be happy if I was contributing to that either. It's a pretty dry interview unfortunately, but I think I did a relatively decent job of paraphrasing it.
     
  13. medoraman

    medoraman Supporter! Supporter

    I was curious Cloud, so this link is what I found. Its maximum prices from Diocletians Edict, so basically price controls like Nixon tried, and like Nixon's they were a failure.

    http://ancientcoinsforeducation.org/content/view/79/98/

    It lists prices of various things in "dc", but at the bottom gives you conversion rates to a gold coin. Doesn't really answer the toga question, but then again by this time togas were not worn commonly in the Roman empire. Interesting link, though, but I would double the prices since these are price control prices, which basically means if you actually wanted to buy something you had to pay black market prices. Politicians never change, they keep using tried and failed policies over time, huh?
     
  14. desertgem

    desertgem Senior Errer Collecktor Supporter

    I am very defensive at this point. Too many chainsaws being juggled by the world comedians at the same time. I sip and snip, buying small quantity of certain stocks when down and selling when up. Selling stock and hedging with its options, etc. I am honest when I say, I have absolutely no idea what the financial system ( including PM) is going to do next week, let alone 3 years from now. I hedged my gold holdings by shorting the euro, and lost on the euro trade so far, but nice extra from the gold, and I sold some gold holdings off, so overall a balance. I was lucky in moving some IRA to my ROTH when the price of gold was low, and now , it may pay for most of the taxes on it :) but I agree with #2, so I just mainly keep quiet about trading, no one believes anyone else anyway.

    Jim
     
  15. fatima

    fatima Junior Member

    I gave my reasons which you conveniently completely ignore and then take the comments completely out of context. Why don't you actually address what I posted? That context was that I only address long term investing here which should be the mode for bullion buyers.

    Lets keep in mind the title of this topic. is "Investing for the Far Off Future". The 50% change in BAC's stock price in 1 month should be very worrying to anyone considering this for a long term buy. Furthermore these price change in BAC are on extremely low volume, i.e. 2.5% of the shares. If you don't understand why that's important, then go look it up. It's not something that inspires confidence and why I say that for long investing, stocks are to be avoided because nobody can say what they will do tomorrow.

    I don't consider 6 months to be long term either, but since we don't seemingly care about context, when I made that commentary about BAC, the stock was $9.71. This is a loss of 19%. In comparison, Gold was $1650 at the time. This is a gain of 4% if you had bought gold at the time and you would be 23% ahead of the BAC buyer. I recommend that anyone here who believes in this bank for a long term investment, go ahead and sell the gold you had back in August and buy BAC. As I've said before talk it cheap. It's the actions that separate the men from the boys.
     
  16. GeorgeM

    GeorgeM Well-Known Member

  17. swish513

    swish513 Penny & Cent Collector

    isn't the stock market speculation? i'm not an expert, never will be when it comes to finances, but putting 100% in one horse seems way more risky than splitting it. just look at the .com stocks. how many are worth what they were 5 years ago? not many from what i've seen. again, i'm not an expert. just inquiring...
     
  18. Smitty

    Smitty New Member

    Any investment that doesn't have a fixed income is speculation. It's a game of probabilities.

    As far as diversifying, there are two schools of thought. One is to spread your stuff around. For most undereducated investors this is probably the way to go. HOWEVER ... many who thought they were diversified in 2008 didn't know how correlated markets can become when things go bad. Basically, EVERYTHING went down. So it didn't matter if you were diversified.

    The other school of thought is to learn everything you can about a particular field of investment and focus on it. For instance, you might study the healthcare field and focus on healthcare stocks.

    Both can be successful.
     
  19. Cloudsweeper99

    Cloudsweeper99 Treasure Hunter

    The more things change, the more they stay the same. I'm not sure that prices in a modern technological society can be usefully compared to another time and place.
     
  20. Cloudsweeper99

    Cloudsweeper99 Treasure Hunter

    It's right for you to ask the question. That's why I've recommended on several occasions to read "The Intelligent Investor" by Ben Graham. It's an easy and interesting read and teaches how to avoid speculation and really invest. Nobody who has read the book would ever have gotten involved in the dot com bubble. I know I'm probably in the minority here, but I don't think safety comes from spreading money around. It comes from knowledge. Investing well is a lot easier that the professionals will ever admit because they derive their income by convincing people that they are doing something that people can't do for themselves. I taught my kids how to pick stocks when they were in high school and both picked up on the value investing technique almost instantly without having ever taken a business course.
     
  21. Cloudsweeper99

    Cloudsweeper99 Treasure Hunter

    I would modify that. Many stocks that don't pay dividends, or pay small but rapidly rising dividends are investments if you pay a low price in relation to earnings-cash flow-net asset value, but speculations if you pay a high price. Assets are speculations or investments based on the price paid for them in relation to the intrinsic value. The observation that it is a game of probabilities is 100% accurate since nobody knows the future.
     
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