Reilly has a very gud point about gold, although I confess to buying some back when it was in the range of $600.00 oz.
Of course you have to remember what happened to the price of gold back in the 1950's when Scrooge McDuck & his nephews found the Lost Mines of the Incas in Peru.
One reason India remains poor is that as soon as they accumulate a little cash they buy gold,
often to bulk up a dowry. They buy a yuge amount yearly rather than investing it in saner things.
A behavioral economist did a study. You can flip a coin to win $200 for heads or 0 for tails,
or you can pass and pocket $100. Most people (not all!) take the sure thang.
Now they said flip the coin to LOSE $200 for heads or 0 for tails, or pass and just pay $100.
Guess what? MOST people will take the gamble!
Obviously the testers did not assemble ‘contestants’ based on their investing acumen but it
clearly confirms that most people are crankloons.
One reason India remains poor is that as soon as they accumulate a little cash they buy gold,
often to bulk up a dowry. They buy a yuge amount yearly rather than investing it in saner things.
An interesting global trend of 2018 seems to be countries dumping US treasuries and buying gold.
And where are we now? Booming market from a longer term perspective, tanking from shorter perspective. What do you do with that info?
Blahblah, you might right, since that's what we've learned from the past. But, I think, this coming crises is different. I wouldn't be surprised if we see 30% correction over the next two years, and then the bear market for another 20+ years. The Feds will try to pump money into the market, but that will eventually lead to an huge inflation. Times are different now. I'm still 30% invested in stocks, just in case I'm wrong. (But I'm never wrong! hehe)
Since I need to live from my savings, I have to protect my principal. Cash (money market) for survival, and gold for the short term investment, seem to be a reasonable insurance against the collapse of the world as we know it. (Short of building a bunker and buying supplies for 20+ years).
briham, per yer latter article:
“Going into the FOMC minutes and subsequent Fed meetings, U.S. bonds look like an attractive risk-reward on the long side”
That’s why I’m long bonds - softens the equities pain now and they will pay off.
I’ll take less payoff if it means much less risk. And in regards to my previous post about
irrational behavior the bond markets are much more rational and, hence, more efficient.
Reilly, I made a simulation involving two scenarios. (No inflation, in order to simplify it).
Assume you need to withdraw a fixed amount of money from your investments every year to make your living.
The first scenario. You are 100% invested in S&P 500.
The second scenario. You are 50% in S&P 500, and 50% in cash. You withdraw either from the S&P found or cash, depending how the market is doing. (Meaning, you withdraw cash when the market is down, and from the S&P 500 found, when its up.
Guess what, historically, you win if you are 100% in S&P 500. Even though, it looks like you should keep some cash in case you are losing money on the S&P 500 investment.
So, you may ask, why I'm so shy with stocks right now. Well, like I said, the times seem to be different now. (I know, I'm timing the market). Fuking dRump!
No argument, as I said earlier, on being wary right now: the atmosphere is unstable with a lot of potential convective activity. Keep yer topgallant masts struck, and double gammon yer bowsprit! And Trump is only the obvious squall on the horizon - rogue waves can strike from any direction!
Blahblah, you might right, since that's what we've learned from the past. But, I think, this coming crises is different. I wouldn't be surprised if we see 30% correction over the next two years, and then the bear market for another 20+ years. The Feds will try to pump money into the market, but that will eventually lead to an huge inflation. Times are different now. I'm still 30% invested in stocks, just in case I'm wrong. (But I'm never wrong! hehe)
"This time is different" can be one of the more pernicious thoughts investors have (and of course it's not just investing: consider relationships, etc.). That is not to say you're wrong on your predictions, although your 20-year bear market is outside consensus views. My view is that something like a 20-year bear market would lead to such a radical restructuring of society that I'm not sure your ownership of cash or bonds or gold would really help. All of our ownership of these assets are just pieces of paper (in the old days, now just bits in the cloud)--when the sh#t really hits the fan, it's probably back to the law of the jungle.
I'm not at all saying you're wrong and I'm right. The current environment is really testing my buy and hold, stick mostly with equities viewpoint. I am thinking of shifting somewhat away from equities, although for me that would probably be something like shifting from 90+% to 70-80% or so. If I do that, I'll cost average in selling over a period of time. But the long term advantage of equities seems so strong that I'll probably stick with that, knowing I may well get burned.
blahblah: I think you have it right with a buy & hold strategy.
This market may well be going to schist, but the longest down market on record was the Great Depression of 1929, which lasted until the ramp up to WWII spending boom in 1939.
I've been reading about a 20 year economic downturn for about 30 years now. There's always room for Doom & Gloom predictors in the market.
If it really goes to sh#t, we have our 5 acre ranchette, with irrigation water, here & 110 miles away is Heidi's family farm, which she owns half of, including the original farmhouse her old man constructed in 1951. (He homesteaded 120 acres then, thanks to a new taxpayer funded dam & a lottery for farmland he won, that you had to prove you were a WWII veteran, had a farming background, & had $2,000.00 in cash.)
The "somewhat conservative" newspaper Business Insider shares CEO concerns.
American CEOs are worried about 4 things. No. 1 is Trump.
A survey of 134 American CEOs was conducted during last week's Yale CEO Summit in New York.
The event was off the record, but The New York Times got access to the results of the survey.
At the top of the CEOs' list of worries? President Donald Trump.
Almost 90% of CEOs surveyed said the president's negotiating style had cost the US the trust of its allies, while three in four CEOs said they often had to apologize to their foreign business partners for the president's behavior.
Three-quarters of CEOs also said they felt the president wasn't leading effectively on national security.
2. The arrest of Huawei CFO Meng Wanzhou — and Trump's potential intervention.
3. A recession caused by political instability.
Half of respondents expressed fear the US could wind up in a recession by the end of the year.
Why?
Sixty-seven per cent blamed political instability in the nation and trade negotiations.
4. Need for more government regulation of tech companies.
Let us know!