Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Warren Buffett: Why stocks beat gold and bonds

finance.fortune.cnn.com

Post reply on HN
Print view View original

141–150 of 208 posts

Re: Warren Buffett: Why stocks beat gold and bonds

#141

Post by saalweachter »

parfe wrote: post #115

If you buy 16 ounces of gold then you have a pile of metal. 5, 10, 20 or 50 years from now it'll still be a one pound pile of metal. Bonds essentially offer the same deal, only you trade a pile of money now for a slightly larger pile of money in the future. Investing in stocks however buys a piece of a growing entity. You buy stock now and the company buys a tractor, a truck, a robotic assembly line, researches some…

Technically you'll have 1.33 pounds of metal :-)

(Precious metals are typically measured in Troy ounces; there are 12 Troy ounces to the Troy pound.)

Re: Warren Buffett: Why stocks beat gold and bonds

#142

Post by neutronicus »

jrockway wrote: post #56
Cushman wrote: post #19

Earlier quoted context omitted.

In any serious failure of government, the value of bullets far outweighs the value of gold.

When the revolution comes, I'm going to hide somewhere and wait for everyone to run out of bullets.

I'm taking an assault rifle to my hidey-hole just in case someone finds me before running out of bullets.

Re: Warren Buffett: Why stocks beat gold and bonds

#143

Post by andylei »

shingen wrote: post #128
Aloisius wrote: post #120

Earlier quoted context omitted.

I know you're heavily invested in gold, but what you say is simply not true. The Gold-Oil ratio has fluctuated from upwards of 36:1 to 1:8 over the past 40 years. Further, if it were true then in 2009 when oil plunged from $140 to $50 a barrel, the value of the dollar should have shot up significantly. When gold dropped 20% last year, there wasn't a corresponding increase in the purchasing power of my dollar. You onl…

I own zero gold. I'm being objective about what it does, and does not do. It's a store of value, that's it. I'm heavily invested in my self. I own a business. Which is also why in one of my posts, I said the best investment you can ever make is: you. Tracking lines on oil and gold requires that you do so over an actual duration, not on select spot prices. Over time, oil and gold have tracked each other extraordinaril…

>> Over time, oil and gold have tracked each other extraordinarily well.

you're just wrong. here's prices over the last 6 years: http://imgur.com/a2mMZ (CLH is crude oil)

>> They're priced in junk dollars.

you're confusing real and nominal prices. if your point is that inflation exists, i don't think you will find anyone that disagrees with you. if your point is that real prices of oil and gold are driven primarily by inflation, you're absolutely wrong.

Re: Warren Buffett: Why stocks beat gold and bonds

#144

Post by parfe »

saalweachter wrote: post #141
parfe wrote: post #115

If you buy 16 ounces of gold then you have a pile of metal. 5, 10, 20 or 50 years from now it'll still be a one pound pile of metal. Bonds essentially offer the same deal, only you trade a pile of money now for a slightly larger pile of money in the future. Investing in stocks however buys a piece of a growing entity. You buy stock now and the company buys a tractor, a truck, a robotic assembly line, researches some…

Technically you'll have 1.33 pounds of metal :-) (Precious metals are typically measured in Troy ounces; there are 12 Troy ounces to the Troy pound.)

Technically, I could still buy 16oz of gold and have a pound... So I officially declare all my metaphorical gold is measured in international avoirdupois ounces.

Which I learned about thanks to Wiki University.

Thanks.

Re: Warren Buffett: Why stocks beat gold and bonds

#145

Post by Aloisius »

shingen wrote: post #128
Aloisius wrote: post #120

Earlier quoted context omitted.

I know you're heavily invested in gold, but what you say is simply not true. The Gold-Oil ratio has fluctuated from upwards of 36:1 to 1:8 over the past 40 years. Further, if it were true then in 2009 when oil plunged from $140 to $50 a barrel, the value of the dollar should have shot up significantly. When gold dropped 20% last year, there wasn't a corresponding increase in the purchasing power of my dollar. You onl…

I own zero gold. I'm being objective about what it does, and does not do. It's a store of value, that's it. I'm heavily invested in my self. I own a business. Which is also why in one of my posts, I said the best investment you can ever make is: you. Tracking lines on oil and gold requires that you do so over an actual duration, not on select spot prices. Over time, oil and gold have tracked each other extraordinaril…

If you open up a graph of the ratio between gold oz and barrels of oil over the last 40 years, you will not see anything resembling a straight line. They don't track each other. At all. Not even a little bit.

There are literally thousands of charts and graphs that you could find a reasonable correlation with gold, but oil is not one of them.

I don't know where you got the idea that they tracked each other, but it is simply wrong. Gold does not track oil, CPI-U does include food and energy and inflation is not anywhere near where you think it is.

Re: Warren Buffett: Why stocks beat gold and bonds

#146

Post by Schultzy »

Aloisius wrote: post #102

Warren Buffet is a value investor. He buys stocks that he sees as fundamentally undervalued during a bear market and sells them when they are overpriced later. If you try to value gold objectively (its industrial and possibly jewelry use), its price should be significantly lower than what it is today. Speculation and paranoia have driven its price to amazing heights. A value investor can't touch gold with a 10 foot p…

If you try to value gold objectively (its industrial and possibly jewelry use), its price should be significantly lower than what it is today.

I think you might be misunderstanding what gives things value. The $20 bill in my pocket has little objective value by your definition. Sure, I could use it as a building material by papering a small piece of my wall with it or I could make an origami ring out of it, but the object's value is not determined by what can be made out of it.

Value is subjective to people's desires and beliefs about what is worth trading for. Gold has value because (almost) everyone anywhere on the planet will accept it in trade.

Gold is priced in dollars and when dollars are flying off of the printing press, but very little new gold is being produced, it follows that the price of gold would increase in terms of dollars. It is inflation that is mostly responsible for driving the price of gold up, not fear.

I'm not suggesting that everyone should be 100% into gold, I merely think that people looking for real value, would find gold very attractive as a reliable way to preserve it.

Re: Warren Buffett: Why stocks beat gold and bonds

#147

Post by Steko »

beagle3 wrote: post #137
Steko wrote: post #125

Earlier quoted context omitted.

"he confiscation of gold was done to eliminate the best (and popular) store of value." 'Best' no, 'popular' yes and that was crippling the economy.

It was 'crippling the economy' in the same sense that Bill Gates and Warren Buffets money not being spent is "crippling the economy". And it what FDR has done to savers is just as fair as "liberating" said money from BillG and WarrenB's bank accounts would be.

"It was 'crippling the economy' in the same sense that Bill Gates and Warren Buffets money not being spent is "crippling the economy". "

Umm no. What happened was people took their money out of the bank to hoard gold which crippled the money supply and credit markets. Which is exactly what would happen if Gates et al. decided to hold their money under the mattress instead of in the bank.

Re: Warren Buffett: Why stocks beat gold and bonds

#148

Post by onemoreact »

shingen wrote: post #128
Aloisius wrote: post #120

Earlier quoted context omitted.

I know you're heavily invested in gold, but what you say is simply not true. The Gold-Oil ratio has fluctuated from upwards of 36:1 to 1:8 over the past 40 years. Further, if it were true then in 2009 when oil plunged from $140 to $50 a barrel, the value of the dollar should have shot up significantly. When gold dropped 20% last year, there wasn't a corresponding increase in the purchasing power of my dollar. You onl…

I own zero gold. I'm being objective about what it does, and does not do. It's a store of value, that's it. I'm heavily invested in my self. I own a business. Which is also why in one of my posts, I said the best investment you can ever make is: you. Tracking lines on oil and gold requires that you do so over an actual duration, not on select spot prices. Over time, oil and gold have tracked each other extraordinaril…

If you bought 1 lb of gold in 1970 and sold it today after taxes you would not have kept up with inflation. Also, the S&P 500 does not include dividends. If you actually buy it's stocks or a fund that tracks the S&P 500 you do much better than the graphs suggest.

Re: Warren Buffett: Why stocks beat gold and bonds

#149

Post by EricDeb »

shingen wrote: post #47
EricDeb wrote: post #33

Earlier quoted context omitted.

So what is your investment recommendation then? Avoid the market and invest in Gold?

Not exactly. If you're asking as a skilled money manager or investor, I'll give you X advice. If you're asking what I think the average Joe should do (someone with limited time and skill when it comes to money management), I'll give you Z advice. A lot of it depends on how hard you're willing to work to protect and grow your wealth. If the market is near 13k like it is today, with corporate profit margins at all time…

Unbelievable response. I am a lowly CS grad student at the moment so investment is not my greatest concern, but hopefully in the near future I will have some money to invest. When that day comes I will take a second look at your advice from a practical perspective. At this point it is fun to fantasize though...

Re: Warren Buffett: Why stocks beat gold and bonds

#150

Post by herge »

shingen wrote: post #140
herge wrote: post #132

Earlier quoted context omitted.

Right, because the price of gold in US$ has tripled in the last five years not because of speculation but because the dollar is one third as valuable as before. That's why the average US wage and minimum wage has also tripled over the same time period, right? Or have we become less efficient and our hour of labour is "worth" a third less? The price of labor eclipses the price of commodities in most of the economy, wh…

That's exactly right, it's because the dollar is collapsing in real value. I dare you to spec out the price of a basket of 10 to 15 commodities from a decade ago compared to where they're at now.

But what about labour prices? Why have they not shot up?
Post reply on HN