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Warren Buffett: Why stocks beat gold and bonds

finance.fortune.cnn.com

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Re: Warren Buffett: Why stocks beat gold and bonds

#161

Post by paganel »

jonnathanson wrote: post #103
klochner wrote: post #6

He omits the only valid reason any non-speculator would own gold - it holds it's value through times of political turmoil - holds it's value over millenia rather than decades or centuries. A coup d'etat may result in seizure of private companies, rendering your stock worthless, but not touching the value of gold. It would be speculating to put all your assets into gold, but a small amount is like an insurance policy.…

If this is an argument for gold, then it's important to note that most gold "owners" don't actually own gold. They own paper. Or, at best, they own shares in funds that must buy and sell their gold on fixed timetables (debatably erasing a lot of the real gains that would be made by holding actual metal). But they're pretty far removed from the physical good -- and, if the shit truly hit the fan, they'd be just as SOL…

> Hedging against the apocalypse is a silly reason to own "gold."

In the last 100 years alone there were at least 2 such "apocalyptic" events: the Russian revolution and the communists' grab of power in China. Granted, there were a couple of lucky stock-owners that didn't see their holdings going to zero (http://en.wikipedia.org/wiki/American_International_Group#Hi...), but generally speaking it would have been much better for a "White" Russian to be carrying gold or jewelry on his way to Paris in the 1920s than to carry worthless Tsarist stocks.

Re: Warren Buffett: Why stocks beat gold and bonds

#162

Post by onemoreact »

reedlaw wrote: post #130
Aloisius wrote: post #113

Earlier quoted context omitted.

As the money supply increases, all currency is devalued and everything that's denominated purely in currency loses value as well. This is a gross oversimplification. The monetary supply can increase without inflationary effects as long as there is a corresponding increase in the production of value in an economy.

Like computers becoming cheaper and cheaper while the prices of other goods increase? That's just another form of inflation because the computers would be that much cheaper if it weren't for an increase in the monetary supply.

His comment is that as long as the supply and demand for dollars remain in balance the value of the USD does not change. The reason the dollar maintains value is because people and companies need to pay trillions of dollars a year in taxes and loans in USD. Which is why despite the fed dumping a lot of money into the economy we have see so little inflation over the last few years.

Re: Warren Buffett: Why stocks beat gold and bonds

#163

Post by wintersFright »

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…

You don't have to believe in the fall of civilisation to realise that the US Govt is currently borrowing $1 trillion per year to fund the non negotiable American lifesyle. Things that cannot go on forever won't, and this is one of them. Take $1 trillion out of the US economy (ie: consume only what you produce) and this will be a non linear event.

I'd recommend you read some FOFOA http://fofoa.blogspot.com.au/2010/07/debtors-and-savers.html (and all the rest.) If nothing else it will help you see the money system in a different light.

Re: Warren Buffett: Why stocks beat gold and bonds

#164

Post by Steko »

smokeyj wrote: post #131
aqme28 wrote: post #106

Earlier quoted context omitted.

Currency is a terrible way to invest. Nobody is arguing that.

Not if that currency is gold. Unless, you don't like turning profits of course.

We got it you like gold. Warren Buffet doesn't. I'll take his advice over yours.

Re: Warren Buffett: Why stocks beat gold and bonds

#165

Post by Steko »

aqme28 wrote: post #108
jrockway wrote: post #55

Earlier quoted context omitted.

Gold has utility: it easily forms a plating on other metals, and conducts electricity even when continuously exposed to air. This is not true of many other metals, hence the popularity of gold-plated electronic interconnects.

I'd need to find the statistic again, but it's something like 15% of the value of gold is due to its utility, and the rest is due to it being shiny/historically valued

50% jewelry (half to india), 40% investment, 10% industrial

Re: Warren Buffett: Why stocks beat gold and bonds

#166

Post by william42 »

shingen wrote: post #9

He's wrong. Stocks do not beat gold once inflation outpaces the rate of average market returns, which is exactly where we're at now. Gold is up 87 fold over 90 years or so. There is no way to capture that kind of return out of stocks, other than to buy one stock, Apple at the absolute bottom, or buy Dell the day it IPO'd or other similar freak scenarios, and then hold all the way through, and then sell at the absolut…

"If you had bought and held the stocks that make up the Dow over 60 or 70 years, you'd have gotten demolished because the Dow constantly shuffles its index."

No, but if you put your money into an index fund, you'd be shuffling your money exactly when Dow did.

Re: Warren Buffett: Why stocks beat gold and bonds

#167

Post by william42 »

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.

Aren't Bill Gates and Warren Buffett currently trying to spend as much of their money as possible on charity work, as well as lobbying to get the amount of taxes they have to pay increased?

Re: Warren Buffett: Why stocks beat gold and bonds

#168

Post by william42 »

smokeyj wrote: post #64
Cushman wrote: post #41

Imagine if gold were a company. Friend: "Hey man, you gotta get in on this— this stock has gone up 30% in the last year! Nowhere to go but up!" You: "Wow, that's amazing! What does it do?" Friend: "Um... it doesn't corrode?"

Imagine if the USD were a company. Friend: "Hey man, you gotta get in on this— this stock has gone down 30% in the last year! Nowhere to go but down!"

Hint: the value of USD isn't as an investment. In fact, if the value of USD goes up, that makes it less useful, because the point of having money is to spend it. For example, one of the many reasons of the utter trainwreck of Bitcoin is the fact that more people were holding it as speculation than actually using it to purchase anything.

And it's only 3% in the last year if you aren't trying to compare it to something mid-bubble. The USD is totally going down with respect to tech stocks, guys!

Re: Warren Buffett: Why stocks beat gold and bonds

#169

Post by [deleted] »

brown9-2 wrote: post #70
jrockway wrote: post #55

Earlier quoted context omitted.

Gold has utility: it easily forms a plating on other metals, and conducts electricity even when continuously exposed to air. This is not true of many other metals, hence the popularity of gold-plated electronic interconnects.

But is that utility that you mention the reason why people bury it again and pay people to stand around guarding it? Gold may have some utility and practical applications but that does not seem to account for all of it's perceived value.

[deleted]

Re: Warren Buffett: Why stocks beat gold and bonds

#170

Post by cm127 »

jrockway wrote: post #55
tnuc wrote: post #49

Warren Buffet once wrote about gold... It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.

Gold has utility: it easily forms a plating on other metals, and conducts electricity even when continuously exposed to air. This is not true of many other metals, hence the popularity of gold-plated electronic interconnects.

Well, then why not rate all the elements in the periodic table? Silver is considered precious and can kill werewolves; Plutonium can send you back to the future. If you start talking about Gold as a resource, then what's the point?
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