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> Wall Street made a mistake with Google, since now their shares now are worth 5 times as much as they were at the opening. August 2004: Gold $405 Google $85

by rplnt 15y ago

> Wall Street made a mistake with Google, since now their shares now are worth 5 times as much as they were at the opening. August 2004: Gold $405 Google $85/share (thought it was $100/share, huh) Now: Gold $1735 Google $576/share 1735/405 ~= 4.27 85*4.27 ~= 364 So no, Google's shares are not worth 5 times more. They value went up some 50% in six years, which is great but nothing scary.

r00fus 15y ago
Once I can buy food directly with my 1oz of gold, I'll buy your gold-based-valuation argument. Comparing one asset (share of GOOG) vs. another, namely, gold is silly when you contrast to assigning currency value. Last I checked, food hasn't become 4x more expensive, so things still revolve around currency (or currencies), not the value of gold.
- sawyer 15y ago
  Since when can you buy food in exchange for stocks?
  - majorlazer 15y ago
    That's the point. You can't buy food with gold or stocks, but you can with money (currency). So that is what you measure the value with.
- DanBC 15y ago
  What's the value in Economist Burgernomics? http://www.economist.com/blogs/dailychart/2011/07/big-mac-index http://www.economist.com/blogs/dailychart/2011/07/big-mac-in...
- moheeb 15y ago
  You should check again. While food prices haven't quadrupled they have doubled... According to the IMF Commodity Price Index, at least. http://www.imf.org/external/np/res/commod/index.aspx http://www.imf.org/external/np/res/commod/index.aspx
  - r00fus 15y ago
    How much of food commodities prices (and for that matter, gold prices) are the result of pure speculation? http://triplecrisis.com/food-price-volatility/ http://triplecrisis.com/food-price-volatility/
CyrusL 15y ago
It's weird that you critiqued his analysis by using gold, which makes no sense for comparison. You might have strong feelings about unbacked paper money, but that doesn't make comparing with gold a sound financial model. August 2004: Orange Juice Concentrate Futures $61 Google $85/share Now: Orange Juice Concentrate Futures $211 Google $576/share 211/61 ~= 3.45 85*4.27 ~= 293.25
- rplnt 15y ago
  You just can't compare to one currency and say it costs 5 times more. What I tried to say was that USD's value changed over the years. Apparently no one understood and everyone is trying to be funny. Sad.
  - eCa 15y ago
    What you really said though was that the value of gold has changed compared to the dollar. Gold is a usual "safe haven" in times of economic troubles - and you could say that we have had those in the last few years. Since 2009 gold has tripled in dollar value [1]. That does not mean that the dollar has lost a third of its value. What your figures show: --- August 2004: Gold $405 Google $85/share Now: Gold $1735 Google $576/share --- Is this: Gold: 1735/405 ~= 4.28 GOOG: 576/85 =~ 6.77 GOOG/Gold: 6.77/4.3 = 1.57 Google have given their shareholders a value worth 57% more than gold. If you instead had kept your $85 in your pocket since 2004, how many dollars would have today? [1] http://goldprice.org/NewCharts/gold/images/gold_5_year_o_s_usd.png?0.43908116164593036 http://goldprice.org/NewCharts/gold/images/gold_5_year_o_s_u...
  - jbooth 15y ago
    What you were saying was wrong, and more importantly invalid. Gold rising in price does not equate to the USD being less valuable, because there are more than 2 things in the world. Bring the Euro and the Yuan into it if you're going to make currency-valuation based arguments. But even more than that, compare it to stock market indices. We're talking about how the market valued it, not about currency valuations. The whole argument about currency valuations is a silly sideshow. In conclusion, if nobody understands the brilliance of your argument, it's probably stupid.
Steko 15y ago
He means in real people's dollars not Ron Paul bucks.
rottencupcakes 15y ago
> Wall Street made a mistake with Google, since now their shares now are worth 5 times as much as they were at the opening. August 2004: AAPL $16 Google $85/share (thought it was $100/share, huh) Now: AAPL $447 Google $576/share 447/16 ~= 27.94 85*27.94 ~= 2374.90 So no, Google's shares are not worth 5 times more. Their value went down a massive amount in six years.
- rplnt 15y ago
  Now, this is stupid.
  - brown9-2 15y ago
    The point is that comparing Google's price in 2004 and 2012 to the price of gold is just as arbitrary as comparing it to the price of AAPL.
gravitronic 15y ago
It may be interesting to compare growth VS gold.. but is it standard to compare against the price of gold? I know nothing of valuation, but by that logic the price of gold would never be worth more.. than.. the price of gold? I thought you'd value the gain in the market currency, aka dollars. No?
- wintersFright 15y ago
  People price things in gold as there is a roughly known and finite quantity either in vaults or in the ground. USD's however have no upper bound and can be conjured into existence as 1's and 0's. Remember there are three functions of money 1) Unit of account 2) Medium of exchange 3) Store of value Currency is not a good store of value - it can be printed at will. It does store value over a short time frame but if you were given a box from 1930 that inside held somones life savings from 1930 - would you wish it to be in USDs or gold? Hint: USDs is the wrong answer! Currency is an excellent medium of exchange. You can buy food at the supermarket with it. Just don't save your surplus wealth in it. Gold is used as a store of value instead of orange juice concentrate since it has historical value, it is fungible, divisible and inert (ie: it won't spoil). Also you are not impinging on the economy by hoarding it as a store of value since it has relatively little utility otherwise. If you think gold is not valuable because you cannot excahnge it for food, then ask yourself why the US Government banned its ownership in 1933 for citizens and why the Euro has it as its number one asset on its consolidated financial statement - above all currencies - including USD http://www.ecb.int/press/pr/wfs/2011/html/fs110706.en.html http://www.ecb.int/press/pr/wfs/2011/html/fs110706.en.html
jrockway 15y ago
It's also possible that gold is not a good indicator of value. (Go to the store and try buying something with gold.)

by rplnt 15y ago

r00fus 15y ago

Once I can buy food directly with my 1oz of gold, I'll buy your gold-based-valuation argument. Comparing one asset (share of GOOG) vs. another, namely, gold is silly when you contrast to assigning currency value. Last I checked, food hasn't become 4x more expensive, so things still revolve around currency (or currencies), not the value of gold.

sawyer 15y ago
Since when can you buy food in exchange for stocks?
- majorlazer 15y ago
  That's the point. You can't buy food with gold or stocks, but you can with money (currency). So that is what you measure the value with.
DanBC 15y ago
What's the value in Economist Burgernomics? http://www.economist.com/blogs/dailychart/2011/07/big-mac-index http://www.economist.com/blogs/dailychart/2011/07/big-mac-in...
moheeb 15y ago
You should check again. While food prices haven't quadrupled they have doubled... According to the IMF Commodity Price Index, at least. http://www.imf.org/external/np/res/commod/index.aspx http://www.imf.org/external/np/res/commod/index.aspx
- r00fus 15y ago
  How much of food commodities prices (and for that matter, gold prices) are the result of pure speculation? http://triplecrisis.com/food-price-volatility/ http://triplecrisis.com/food-price-volatility/

CyrusL 15y ago

It's weird that you critiqued his analysis by using gold, which makes no sense for comparison. You might have strong feelings about unbacked paper money, but that doesn't make comparing with gold a sound financial model. August 2004: Orange Juice Concentrate Futures $61 Google $85/share Now: Orange Juice Concentrate Futures $211 Google $576/share 211/61 ~= 3.45 85*4.27 ~= 293.25

rplnt 15y ago
You just can't compare to one currency and say it costs 5 times more. What I tried to say was that USD's value changed over the years. Apparently no one understood and everyone is trying to be funny. Sad.
- eCa 15y ago
  What you really said though was that the value of gold has changed compared to the dollar. Gold is a usual "safe haven" in times of economic troubles - and you could say that we have had those in the last few years. Since 2009 gold has tripled in dollar value [1]. That does not mean that the dollar has lost a third of its value. What your figures show: --- August 2004: Gold $405 Google $85/share Now: Gold $1735 Google $576/share --- Is this: Gold: 1735/405 ~= 4.28 GOOG: 576/85 =~ 6.77 GOOG/Gold: 6.77/4.3 = 1.57 Google have given their shareholders a value worth 57% more than gold. If you instead had kept your $85 in your pocket since 2004, how many dollars would have today? [1] http://goldprice.org/NewCharts/gold/images/gold_5_year_o_s_usd.png?0.43908116164593036 http://goldprice.org/NewCharts/gold/images/gold_5_year_o_s_u...
- jbooth 15y ago
  What you were saying was wrong, and more importantly invalid. Gold rising in price does not equate to the USD being less valuable, because there are more than 2 things in the world. Bring the Euro and the Yuan into it if you're going to make currency-valuation based arguments. But even more than that, compare it to stock market indices. We're talking about how the market valued it, not about currency valuations. The whole argument about currency valuations is a silly sideshow. In conclusion, if nobody understands the brilliance of your argument, it's probably stupid.

Steko 15y ago

He means in real people's dollars not Ron Paul bucks.

rottencupcakes 15y ago

> Wall Street made a mistake with Google, since now their shares now are worth 5 times as much as they were at the opening. August 2004: AAPL $16 Google $85/share (thought it was $100/share, huh) Now: AAPL $447 Google $576/share 447/16 ~= 27.94 85*27.94 ~= 2374.90 So no, Google's shares are not worth 5 times more. Their value went down a massive amount in six years.

rplnt 15y ago
Now, this is stupid.
- brown9-2 15y ago
  The point is that comparing Google's price in 2004 and 2012 to the price of gold is just as arbitrary as comparing it to the price of AAPL.

gravitronic 15y ago

It may be interesting to compare growth VS gold.. but is it standard to compare against the price of gold? I know nothing of valuation, but by that logic the price of gold would never be worth more.. than.. the price of gold? I thought you'd value the gain in the market currency, aka dollars. No?

wintersFright 15y ago
People price things in gold as there is a roughly known and finite quantity either in vaults or in the ground. USD's however have no upper bound and can be conjured into existence as 1's and 0's. Remember there are three functions of money 1) Unit of account 2) Medium of exchange 3) Store of value Currency is not a good store of value - it can be printed at will. It does store value over a short time frame but if you were given a box from 1930 that inside held somones life savings from 1930 - would you wish it to be in USDs or gold? Hint: USDs is the wrong answer! Currency is an excellent medium of exchange. You can buy food at the supermarket with it. Just don't save your surplus wealth in it. Gold is used as a store of value instead of orange juice concentrate since it has historical value, it is fungible, divisible and inert (ie: it won't spoil). Also you are not impinging on the economy by hoarding it as a store of value since it has relatively little utility otherwise. If you think gold is not valuable because you cannot excahnge it for food, then ask yourself why the US Government banned its ownership in 1933 for citizens and why the Euro has it as its number one asset on its consolidated financial statement - above all currencies - including USD http://www.ecb.int/press/pr/wfs/2011/html/fs110706.en.html http://www.ecb.int/press/pr/wfs/2011/html/fs110706.en.html

jrockway 15y ago

It's also possible that gold is not a good indicator of value. (Go to the store and try buying something with gold.)