Investing For The Far Off Future

They have a relationship because they are both stores of value that people use as investment vehicles. You could compare avocados and toothpicks if you wanted to. The relevancy depends on what a person places value in. If you don't value gold then the DOW/gold ratio probably won't matter much to you, but the numbers are what they are, and the trend is clear. Until it reverses and defies history I will use that as a guide. In all honesty I don't care why they have a relationship, merely that there is a historical perspective between them for me to examine. Anybody may feel free to give it as much or as little merit as they see fit. I would add that it has been historically consistent for thousands of years up until the Bretton Woods agreement for everything to be priced in terms of how many ounces of gold it costs, so for that reason alone the ratio of anything to gold is relevant from a valuation standpoint.

 

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In the past decade? The first 7 years of the 2000s were marked by a market being goosed up by cheap credit, so that even a chimpanzee could make money in it. No thinking required. Since 2008 the market has made swings of more than 100% in less than 12 months and is only being saved now by Federal Reserve monetary actions. There is absolutely no way to apply Graham's theories when the laws and rules that govern the stock market are being routinely broken by the big players and there are no repercussions for it. If you are not an insider, it's nothing more than gambling except that nobody knows how bad the odds are.

 

I agree 100% that if you are into the rental market if you can't get into a positive cash flow situation immediately, then don't buy the property.

However with this market, here again we have Edited ~ specific political opinions. Go to the PRWE forum to discuss.

 

A dow/gold relationship has thousands of year of history?

Its not that I don't value gold sir, I owned it and silver for far longer than you I believe, its just that particular relationship I do not think holds merit. Just because two numbers appear to have some type of relationship over a period of time does not mean there is any predictive value in it at all. If you do not understand WHY two things are related, then any ratio is pure coincidence in my view.

Of course, you can believe whatever you feel like.

 

It would be a logical fallacy to make a claim such as this for anyone aside from yourself. if you are not a doctor and can prove that brain wiring causes such actions in everyone, then it doesn't have anything to do with a proof beyond your own experience. Personal anecdotes are just that, personal.

In regards to the silver vs lemon crop example at best you can only prove that lemons and silver don't have any relationship. It says nothing about Gold vs the Stock Market ratio, if there is one. They are totally unrelated. By making such a comparison, you have just committed the very error that you speak against.

 

Lol. First, pick up a psychology book and learn that human perception of relationships is a basis of neurobehavioral theory. Second, me showing a relationship could be perceived between two unrelated things proves the same could be happening between gold and the Dow.

I committed no errors, the only errors were your reading comprehension in your zeal to try to insult me. Sorry Fatima, but your patented, "Personal Anecdotes" stock insult just simply does not apply. Try it on the next poster you wish to peeve off, I am above your petty, simple minded insults.

 

Gold has a relationship with all assets as the valuation mechanism over thousands of years. The DOW has less history with gold, but the valuation by gold concept applies since it applies to everything. It's commonplace to measure value with currency these days, but for those of us who still measure the value of currency and everything else with gold as used to be the case it provides added perspective.

 

There is a relationship between Gold and the stock market that was warned about 100 years ago. The warning at the time was the primary reason for creating the Federal Reserve was to turn the stock market into a big gambling machine. It was warned that gold based money would be eliminated as well because such a mechanism would force it. This in fact happened almost immediately with the huge speculation in equities that took place in the 1920s from cheap credit now possible, and the subsequent crash that sent people leaping out of windows. 3 years later people had to give their gold to the Federal Reserve.

Give people an alternative to the paper currency that we have now, one that isn't subject to monetary expansion and hence loss of value, and the stock market will die with it. Gold and the stock market have been tied at the hip via the Federal Reserve for close to 100 years.

 

This warning was published in 1912 in response to the Aldrich Plan (later renamed to the Federal Reserve Act) which would turn control of the nation's currency over to the private bankers. In order to do so they had to take the gold. It was very prophetic as the warning is absolutely true today.

 

And your own words prove your previous statements wrong. When the market was rising, anyone could have made good money. And anyone following Ben Graham would have sold part of their portfolio as a result. When the market fell apart, anyone following Graham would have put the money back in and profited again since then. It really isn't that difficult unless you insist on buying at the exact bottom and selling at the exact top. Graham's principle still work and will probably always work. And they can be applied without paying any attention to the Fed or what is happening in Europe or even what is happening in the market averages. All it takes it to keep an eye on individual companies. For those of us who use Graham's principles, the past decade has been a profitable, if wild, period of time. More people should read Graham and apply value investing principles, but has Graham himself observed, value investing has never been particularly popular on Wall St.

 

You are correct, of course. The brain is wired to recognize patterns and see relationships because that is what kept them alive for the past million years. But the same hard wiring that allows someone to spot the predator in the grass will also imagine gold/silver and Dow/gold relationships where no cause and effect exists. So in that sense, instinct isn't up to the task of living in a modern technological society. And it is amusing to watch people here deny well-established scientific thought to try to blindly support their theories about gold.

 

No denials of science here, but there is scoffing at frick & frack arm chair science involving brain anatomy and stock prices. I think you two have finally jumped the shark on that one. LOL

 

I have taken graduate classes on the subject. You are the armchair critic trying to find something to contribute, and failing that resorting to slinging mud.

You criticize my point, and when proven wrong say you were never denying that but still throw insults. Hopefully most here see such posts for what they are.

 

Another personal anecdote given to prove a point which can't be verified, counted on, or reproduced. It's what people do who can't make logical and sensible arguments. This falls into the category of focusing on the validity of messenger instead of the validity of the message. I would have hoped that you would have progressed beyond this by now.

 

And I had hoped you would actually concentrate on the subject, and not take these threads down dead end, meaningless paths which do nothing to advance knowledge. Taking pot shots from the sidelines while repeatedly refusing to acknowledge when you have pointed been proven wrong does nothing to help advance anyone's knowledge on any subject except for your personality.

My assertion as to the nature of human computational experience has been affirmed by another poster, over your potshots, then you turn around and say you agree, (proving you were wrong again, though you will NEVER admit that), then you still throw derision my way. What good ARE your posts anyway? If you have a problem with my posts how about addressing the post and stop insulting me? Heaven forbid anyone learn anything here, or we have a valid debate.

I posted about taking classes on this subject to say its not a theory I have made up, its an accepted view. Just what basis do you judge that my post was wrong? I post WHY I believe something, you simply are a monkey throwing poo at everyone.

 

Ok, lets drop the personal comments, the original poster seems to have left about 150 posts ago and I don't think anyone noticed.

 

My apologies everyone. I will promise to never make personal comments again if I may have the same courtesy in return.

To the OP, (if you are still reading), you can see there is no "right" answer nor should there be. Everyone has different opinions and risk tolerances, and there simply no way of knowing who will be right until its too late. Being just 20 and saving anything makes you ahead of the game, and your investment decisions will not be so critical until you get more money put away. Until then, save money, stay out of bad debt, (excluding education and home purchase), and educate yourself on finance and make your own decision. I think most of us here would agree with that, (but it may be the ONLY thing we agree on lol).

Chris