Coin investing, keep the flaming down!

Discussion in 'Coin Chat' started by snaz, Oct 31, 2009.

Page 4 of 4
  1. chip

    chip Novice collector

    I have enjoyed reading the many answers.

    I think that when it comes to investing, luck is better than knowledge, sorry I know we are supposed to make a bow to education but if I could choose between being the most educated sob, or the luckiest sob, I thing being the luckiest might be more fun.
     
    chip, Nov 3, 2009
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  3. Conder101

    Conder101 Numismatist

    Very true I neglected to consider the transaction costs or taxes on the gain. Getting worse all the time.
     
    Conder101, Nov 3, 2009
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  4. clembo

    clembo A closed mind is no mind

    I don't have time right now to read all the responses but I will tell you THIS.

    BEANIE BABIES ARE A SOLID INVESTMENT RIGHT NOW!
     
    clembo, Nov 3, 2009
    #63 + Quote Reply
  5. Morgan1878

    Morgan1878 For A Few Dollars More..

    With respect to trying to find the bottom of the market for buying or the top for selling, here's another Wall Street proverb:

    "I always buy 20% above the bottom and sell 20% before the top, but the 60% in between sure is sweet!"
     
    Morgan1878, Nov 3, 2009
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  6. GDJMSP

    GDJMSP Numismatist Moderator

    Yes you do make your money by buying right. But as you said, knowing the when is a biggie. Guess right and you come out smelling like roses. Guess wrong and it doesn't smell so sweet.

    Home prices for example have been dropping for over 2 years now and show no signs of stopping any time soon. Would it have been wise to buy a year ago when prices were still dropping ? Would it be wise to buy now when prices are still dropping ?

    Same thing with coins. Look at the graph, would it have been wise to buy in in Sept or Oct of 1989 ? It was a dropping market, the market had dropped a lot even, 30% from its peak. Or even in Jan of '91 ? The market had dropped another 30%.

    [​IMG]

    But no, the graph shows you that the market didn't stop dropping until it had dropped from a high of 180,000 to a low of 45000 in 1995 for a total drop of 75% - 6 years later when the market had one fourth it's previous value.

    Had you bought in that dropping market in '89 or '91 - you'd still be underwater with your investment - 20 years later. So buying in a dropping market is really not very wise, unless you happen to be very, very lucky.

    It is always, always the wiser choice to wait for the market to stablize or start an upward turn. And it has to be a sustained upward turn, not what they call a dead cat bounce like it experienced in 1990.

    As in anything - patience is your friend.
     
    GDJMSP, Nov 4, 2009
    #65 + Quote Reply
  7. Cloudsweeper99

    Cloudsweeper99 Treasure Hunter

    Wow! That sounds easy! Tell me, exactly what percentage above the bottom and below the top are we at right now?
     
    Cloudsweeper99, Nov 4, 2009
    #66 + Quote Reply
  8. Morgan1878

    Morgan1878 For A Few Dollars More..

    I only quoted the proverb, I don't claim to have the expertise to actually put it into practice.

    To answer your question, what market are we talking about? Commercial real estate, emerging market equities, gold? Each one is at a different point with respect to its lows and highs.

    What is often true about markets however is that they decline more than they should because fear becomes a factor and accelerates selling sending prices significantly below what the fundamentals would suggest is a reasonable price.

    Conversely, in a rising market, greed accelerates buying sending prices higher than the fundamentals would suggest the investment should deserve.

    Thus, the investor who buys above the bottom or sells before the top is acting at a point when he feels the market is being driven by facts rather than emotions since in his view the emotional variable creates a more unpredictable investing environment. Fear at the bottom and euphoria at the top make it difficult to make rational investment decisions. As an example, at the height of the real estate boom, there were many solicitations to attend seminars to learn the art of "flipping". The smart investor sees this and quietly folds his tepee before the cavalry arrives.

    You have to be aware of your own emotions and how they affect your investment decisions. You also have to see to what extent irrational forces are driving the market and act accordingly.I think that is what the quote intends to drive home.

    I also know from reading many of your posts that you are well aware of all of this.
     
    Morgan1878, Nov 5, 2009
    #67 + Quote Reply
  9. texmech

    texmech Wanna be coin collector

    potato.. potataw, all I know is I like coins.
     
    texmech, Nov 5, 2009
    #68 + Quote Reply
  10. panamagold

    panamagold Junior Member

    How did they determine the rate of return on the coin investment? Is it based on book value or actual liquidation averages?

    PG
     
    panamagold, Nov 5, 2009
    #69 + Quote Reply
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