Reply to Thread

Message:: [QUOTE="Juan Blanco, post: 1655608, member: 41665"]Not certain how to calc initial stock index valuations: my 1993 starting value is 861 Kčs, not 1,000 Kčs. It appears the April 6, 1993 - 12/31/1994 return should be -35.28% and following years' returns (from the Prague Stock Market Index website) are not declared TR (w/div reinvested.) Delisting may also entail TOTAL LOSS (an omission known as 'survivorship bias') so I would only suggest these returns for the Prague Index as partial indication of Czech investor losses. (9mo)1993: -5.89%1994: -31.24%1995: -23.56%1996: +26.70%1997: -8.21%1998: -20.41%1999: +24.23%2000: -2.29%2001: -17.53%2002: +16.75%2003: +43.06%2004: +56.58%2005: +42.73%2006: +7.87%2007: +14.24%2008: -52.72%2009: +30.19%2010: +9.62%2011: -25.61%2012: +14.01%2013: +3.16% As an alternative to Cz stocks, compare possible purchasable 8 coins (50% Ag '100 Korun 1951 K. Gottwald') for 108.27 Kčs/ea. on 4/6/1993 = ~861 Kčs 1) 4/6/1993 Equity Investment = 861 Kčs, in stocks >>> = 2/8/2013 994.1 Kčs ~ +15.46% nominal gain (over nearly 20 years.) 2) 4/6/1993 Equity Investment = 861 Kčs, in stocks >>> = 2/8/2013 994.1 Kčs ~ - 55.89% actual LOSS to currency depreciation/inflation3) By comparison: a 1993 Coin Investment ('100 Korun 1951 K. Gottwald' same premium/cost-basis, above) and recent auction would have realized 3,035 Kčs.4) Net feeBay -13% the Coinvestment alternative would return "worth" of ~2,640 Kčs, or 2.66x the Cz. stock index return.5) Caveat: no idea what taxes or other costs might factor in either investment alternative, over time. This is 'best estimation' only. I don't believe there's anything special about the numismatic example I've used - that is too say, Communist Dictator Klement Gottwald's 1951 coin does not command great popularity in free-mkt Czechia nor any 'extraordinary premium' at auction. So it's a fairly representative Ag coin, what Czechoslovaks actually hoarded and could have purchased/sold in the period both before & after 1993.  Some did, in fact! The Big Picture? The persistent and tirelessly repetitive Paper Bug notion that "stocks are always better than coins/PMs" is shown here to be FALSE. Whether or not most emerging economies & stock markets so favored Ag (in this period) I cannot say. But the US stock market's best 60 years 1946-2006 should probably NOT be assumed 'the global norm', either. Factoring Paper Depreciation, numismatic value and PMs offer even better opportunities for non USD investors to hedge and diversify their portfolios. It would be useful to see other non-US stock returns & currency calculations for LOCAL Ag in different periods, too.[/QUOTE]

Create my FREE Account!

Log in or Sign up

Reply to Thread

Useful Searches