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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

#181

Post by pradocchia »

ubernostrum wrote: post #30
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.…

The problem with gold in times of turmoil basically boils down to you saying "here's (insert weight) of gold that I'll use to pay for this", and the person you're dealing with saying "yeah, and I'm the Queen of England". Without some sort of neutral respected authority to assay and say "yup, it's gold", you just have shiny pebbles and/or dust. And when everything around you has collapsed, reliable access to a trusted…

No, gold isn't for times or turmoil, it's for when things quiet down again--seed stock for rebuilding your life once stability returns.

Re: Warren Buffett: Why stocks beat gold and bonds

#182

Post by stouset »

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…

So let me get this straight.

Half of your thesis is that gold is great because you don't have to do anything but sit on it and hold it, unlike stocks (we'll pretend that index funds don't exist in your fairy-tale world). The amateur investor can just buy and hold, no rebalancing necessary.

And then you turn around and, as investment advice, essentially say "The trick is to, without the benefit of hindsight, figure out what each next bull market is going to be, buy it at the bottom and sell it when it's at the top."

Fantastic fucking advice. Mind if I borrow your time machine sometime?

Re: Warren Buffett: Why stocks beat gold and bonds

#183

Post by [deleted] »

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…

[deleted]

Re: Warren Buffett: Why stocks beat gold and bonds

#184

Post by nl »

arjunnarayan wrote: post #69
dmm wrote: post #17

Earlier quoted context omitted.

I think he was talking about a small amount of gold. Twenty-thousand dollars worth could fit in your hand and easily be smuggled in clothes, luggage, etc. That's pretty handy if you had the flee the country from nazis(or whatever) that have stolen all of your other assets. Admittedly that's a pretty unlikely scenario.

If we've come to the point where you're fleeing the country from Nazis with only what you can carry in your hand, the only thing that's going to be sustainable is investment in _yourself_ through massive education. That way you're up and working and earning from the moment you're safely away.

Since we are talking Sci-Fi scenarios...

It makes a lot of sense to try and carry as much value with you as possible. Conditions during the course of your escape are likely to be difficult and the ability to pay for thing (=bribe your way out of trouble) is likely to be much more useful than knowledge of advanced mathematics or Python minutea.

(Of course, the most useful way to carry value in an escape scenario is gemstones, not gold, since it is much easier to hide during transport).

Re: Warren Buffett: Why stocks beat gold and bonds

#185

Post by smokeyj »

william42 wrote: post #168
smokeyj wrote: post #64

Earlier quoted context omitted.

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…

Currency markets exist. USD is an asset that can be traded. Holding USD is an investment -- although, not necessarily voluntary. I don't know why you're comparing gold to a baby p2p app with microscopic trade volume. That just seems odd. Because they both experience deflation? In that case, all inflation goes the way of Zimbabwe and even more worthless than gold.

Re: Warren Buffett: Why stocks beat gold and bonds

#186

Post by smokeyj »

Natsu wrote: post #119
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…

"The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond." -- Warren Buffet He doesn't mince words, does he?

I wonder what 170,000 tons of paper can produce. Does paper respond to Buffet's fondling?

Re: Warren Buffett: Why stocks beat gold and bonds

#187

Post by nl »

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.

That's an inaccurate analogy (or rather it make the point opposite to what I think you are trying to say).

Gate's and Buffet's "money" is stored in stock in companies, which add value to the economy - ie, their money is active and productive. That's the opposite to storing value in gold.

Re: Warren Buffett: Why stocks beat gold and bonds

#188

Post by InclinedPlane »

andylei wrote: post #139
shingen wrote: post #112

Earlier quoted context omitted.

Gold is priced in dollars. If the dollar loses real value, gold goes up. It's the same reason oil is $100, its baseline price is getting set ever higher, because it's priced in dollars. Price oil in silver or gold and you'll see that oil hasn't gone up in price, the dollar has gone down. It's not paranoia or speculation primarily driving the price increase, but the objective destruction of value represented in what a…

actually if you adjust oil prices for inflation, you'll see that oil prices (in real terms) has gone up. http://inflationdata.com/inflation/inflation_rate/historical... > It's not paranoia or speculation primarily driving the price increase the price of oil is driven by supply and demand. the useful of oil has gone up, but the amount of oil we extract has not kept up. that's why the price has moved.

I fear this might be too much a tangent...

The price for oil is affected by supply and demand but also by speculation. People invest in oil, and people speculate in oil. More so, the price for oil includes a substantial degree of risk assessment. If buyers and sellers both agree that the future of oil production (due to geopolitical instability, for example) is at risk and could lead to oil shortages tomorrow then they will settle on higher oil prices today.

The same sort of effects don't enter into the price of, say, Aluminum which is much less entertwined in complex geopolitical situations.

Re: Warren Buffett: Why stocks beat gold and bonds

#189

Post by InclinedPlane »

ubernostrum wrote: post #30
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.…

The problem with gold in times of turmoil basically boils down to you saying "here's (insert weight) of gold that I'll use to pay for this", and the person you're dealing with saying "yeah, and I'm the Queen of England". Without some sort of neutral respected authority to assay and say "yup, it's gold", you just have shiny pebbles and/or dust. And when everything around you has collapsed, reliable access to a trusted…

And then the guy who stocked up on ammunition instead of gold points a gun at you and says "thanks for the gold", then leaves.

Re: Warren Buffett: Why stocks beat gold and bonds

#190

Post by InclinedPlane »

beagle3 wrote: post #74
kahawe wrote: post #16

In the 90s everyone rushed the IT shares and then the dotcom bubble burst. In the first decade of our new millennium, real estate and all sorts of weird financial products somehow building on real estate were THE best way to invest money because nothing can happen, you have a house standing right there, right?? Then that bubble burst. Now, you'd think people would have learned by now but no... sure as hell now everyo…

Except gold and silver have a couple of millenia of history, that shows that unlike fiat money, they retain their value. (Unfortunately, your friend is likely to lose his pants again -- not because gold is going to lose its value, but because there is no way to invest in gold without fiat and counterparty risk which is equivalent or even worse than the equity investment risks. If you don't believe that, ask any MF Gl…

Gold retains its value over time only on average. Guess what? So does real estate. Gold over the past 30 years has retained its value relative to gold a century ago. But right this very minute we're in the middle of a gold bubble. If you buy gold today and then sell it a decade from now there is a great likelihood that you will lose, not retain, perhaps 75% of your investment.

There were booms and busts in the value of gold in the 70s and 80s as well.

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