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Compare a stock portfolio with a simple precious metals basket. The stock market is a poor longterm store of value. It's very hard to stay ahead of inflation w

by iwwr 16y ago

Compare a stock portfolio with a simple precious metals basket. The stock market is a poor longterm store of value. It's very hard to stay ahead of inflation with securities whose value can be fudged by cheap money. In fact, pension funds can't even make +inflation guarantees, only best efforts through low-risk investments. And even if they did, they would be lying.

lsc 16y ago
>Compare a stock portfolio with a simple precious metals basket. The stock market is a poor longterm store of value. while I agree that this would make a very interesting chart, do you have a reference for that? I mean it's clear that during the last 10 years, nothing has touched metals, but if you were in gold for the 10 years before that, things wouldn't have gone quite as well.
- encoderer 16y ago
  I keep hearing "Gold always goes up." It gave me this thought.. 2010 "Gold Always Goes Up" 2004 "House Prices Always Go Up" 1999 "The US stock market always goes up"
  - deleted 16y ago
    [deleted]
  - bodyfour 16y ago
    Sort of like: 1979 "Gold Always Goes Up" http://mjperry.blogspot.com/2010/09/chart-of-day-inflation-adjusted-gold.html http://mjperry.blogspot.com/2010/09/chart-of-day-inflation-a...
  - nostrademons 16y ago
    I think it's fairly obvious that there's a bubble in gold right now, and I would gleefully short it if I didn't suspect that the market will stay irrational longer than I can stay solvent...
- mynameishere 16y ago
  http://www.ritholtz.com/blog/wp-content/uploads/2010/05/4-2-10-Monthly-SP-in-Gold.gif http://www.ritholtz.com/blog/wp-content/uploads/2010/05/4-2-... Also, gold is tax-disadvantaged.
  - lsc 16y ago
    I'm aware of some of the disadvantages; my understanding is that if I buy a Krugerrand, it appreciated (even if it's just keeping up with inflation) and I sell it, I need to pay a higher "collectors" tax rate rather than capital gains. However, my understanding is that this is fairly easy to get around, either buy going for a ETF like GLD, buying stock in a company that owns gold 'in the ground'
amh 16y ago
Problem is, precious metals have an expected return of 0%. One gold bar sitting on a shelf is still one gold bar ten years later. Commodities are not necessarily a bad idea to own in moderation, but stocks and bonds are what allow your portfolio to benefit from economic growth. For those who are enamored with gold and want to invest conservatively, I would look at something like the Permanent Portfolio (http://crawlingroad.com/blog/2008/12/22/permanent-portfolio-historical-returns/ http://crawlingroad.com/blog/2008/12/22/permanent-portfolio-...) Not how I would invest personally, but the PP isn't an unreasonable approach.

by iwwr 16y ago

lsc 16y ago

>Compare a stock portfolio with a simple precious metals basket. The stock market is a poor longterm store of value. while I agree that this would make a very interesting chart, do you have a reference for that? I mean it's clear that during the last 10 years, nothing has touched metals, but if you were in gold for the 10 years before that, things wouldn't have gone quite as well.

encoderer 16y ago
I keep hearing "Gold always goes up." It gave me this thought.. 2010 "Gold Always Goes Up" 2004 "House Prices Always Go Up" 1999 "The US stock market always goes up"
- deleted 16y ago
  [deleted]
- bodyfour 16y ago
  Sort of like: 1979 "Gold Always Goes Up" http://mjperry.blogspot.com/2010/09/chart-of-day-inflation-adjusted-gold.html http://mjperry.blogspot.com/2010/09/chart-of-day-inflation-a...
- nostrademons 16y ago
  I think it's fairly obvious that there's a bubble in gold right now, and I would gleefully short it if I didn't suspect that the market will stay irrational longer than I can stay solvent...
mynameishere 16y ago
http://www.ritholtz.com/blog/wp-content/uploads/2010/05/4-2-10-Monthly-SP-in-Gold.gif http://www.ritholtz.com/blog/wp-content/uploads/2010/05/4-2-... Also, gold is tax-disadvantaged.
- lsc 16y ago
  I'm aware of some of the disadvantages; my understanding is that if I buy a Krugerrand, it appreciated (even if it's just keeping up with inflation) and I sell it, I need to pay a higher "collectors" tax rate rather than capital gains. However, my understanding is that this is fairly easy to get around, either buy going for a ETF like GLD, buying stock in a company that owns gold 'in the ground'

amh 16y ago

Problem is, precious metals have an expected return of 0%. One gold bar sitting on a shelf is still one gold bar ten years later. Commodities are not necessarily a bad idea to own in moderation, but stocks and bonds are what allow your portfolio to benefit from economic growth. For those who are enamored with gold and want to invest conservatively, I would look at something like the Permanent Portfolio (http://crawlingroad.com/blog/2008/12/22/permanent-portfolio-historical-returns/ http://crawlingroad.com/blog/2008/12/22/permanent-portfolio-...) Not how I would invest personally, but the PP isn't an unreasonable approach.