RE: The Stock Market Has Officially Entered Crazytown Territory

agip wrote:

it's hard to find a time frame during which gold has outperformed stocks - starting in 2000 is just about the only way to do it.

My chart doesnt' have a starting period in 1970 so I can't test your hypothesis.

Agreed on the unpredictablity of the stock market

It's not a hypothesis. It's the real numbers. This is a chart of gold futures from 1970 to 1980:

And THIS is the chart of the DOW that goes with it:

It's not just that gold went from $30 to $559 in 10 years, but the stock market got absolutely killed in real terms. In nominal terms, the DOW went nowhere from 1964 to 1989. In the 1970's, there were two large bear markets of 30-50%, which makes it somewhat like the current period. But after the oil crisis in 1973, the 1970's was a period of high inflation. I can remember when Southern Company (the nuclear utility) paid 15% dividends...and that was not enough to avoid losing money. Between 1964 and 1984, the DOW LOST 70% in real terms. Anybody like Flagpole sitting in stock mutual funds like some kind of religion would have been essentially wiped out, and that's why William O'Neal became publisher of IBD instead of being a broker/active manager (his system totally failed in the environment after 1969).

In the last 50 years gold has badly outperformed stocks and the opposite has occurred for roughly half of the time. So, overall, if you held both from 1970 the amount would be about the same.

coach d,

I had to use Ctrl- to make the screen have enough room to read your post.

Dude, get to know

www.tinyurl.com

. Seriously.

Besides that...

1) No one has been wiped out sitting in stock mutual funds. If they drop a ton, then you either buy more or hold tight, because those stocks will ALWAYS come back. If you are retired, you simply use OTHER sources of income...Social Security, pensions, cash reserves, CDs, bonds, whatever. I DO preach diversity in retirement. Doesn't mean you need to own gold though.

2) I reject your analysis anyway. Dow in 1964 was 834.05. Dow in 1984 was 1178.48, and yes, while I understand you said "real terms", I still reject. If you are working toward retirement, you can greatly affect "real terms" so that a Dow increase still means a lot to you (retire with a paid for house and ZERO debt), ESPECIALLY if you were reinvesting dividends the whole time. People who invoke the "real terms" thing are either doomsdayers or permabears or just pessimistic.

Either you invest income you have today that you don't need so that you will HAVE an income when you no longer are working, or you don't. Simple as that.

Show Me the Money wrote:

bul kathos wrote:

(1)This last year has seen the manipulation go into overdrive. I have never seen anything like 2013 where fundamentals play no part whatsoever in the value of assets.

(2)Physical Gold is in huge demand but the price has been hammered down.

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(1) implies that you are probably under 19 years old

(2) suggests that you do not understand the law of supply and demand

Thanks for your very insightful input though.

It's funny how people like you think social denigration somehow equates to a rebuttal or refutation. If you actually knew anything about the gold futures market you would realize that, like the silver market, the US government and its banking cronies (principally JP Morgan, others too) are unabashedly manipulating futures and spot prices. It is so incredibly obvious if you look into the volumes and where the orders are being logged onto the exchange. Someone sued about the silver market recently, but naturally the government isn't about to convict itself.

They do this as a means of maintaining the "convertibility" of the Western fiat currencies in the face of escalating demand for "hard" investments.

1) you can't end any discussion of metals in 1980 - that was a crazy peak year, no?

2) you're using the Dow as a market proxy, which is usually not a good representation of the market. And you aren't counting dividends.

Using the Sp500 instead of the Dow since 1/1/1970 til now, with dividends reinvested, the numbers come out very strong for stocks

gold: 8.6%

sp500: +10.3%

that said, I am surprised gold has done that well - I would have guessed 3-5%.

3) You're still picking a arbitrary date - 1970. The charts wold look very different since 1974, with the stock market at half the level of 1970. or around half anyway.

yeah france wrote:

Show Me the Money wrote:

(2) suggests that you do not understand the law of supply and demand

Thanks for your very insightful input though.

I think you misread the post. When demand goes up there are more people competing for fewer resources so the price of the resource goes up as well.

So it is counter-intuitive for price to go down with surging demand.

Like I said, you clearly do not understand the law of supply and demand.

Postulate:

Gold has the same value it just takes a larger number of dollars to satisfy the value.

educate me

Obama rocks. I just sold enough stock last month to pay off my mortgage.

dollars = fluid gold = static wrote:

Postulate:

Gold has the same value it just takes a larger number of dollars to satisfy the value.

educate me

iron = static

silver = static

real estate = static

pork bellies = static

platinum = static

Mickey Mantle baseball card = static

Van Gogh painting = static

milk = fluid static

And yet the exchange rate for all of these things changes over time.

Well, I'll be! Aint that somethin?

Flagpole wrote:

2) I reject your analysis anyway. Dow in 1964 was 834.05. Dow in 1984 was 1178.48, and yes, while I understand you said "real terms", I still reject. If you are working toward retirement, you can greatly affect "real terms" so that a Dow increase still means a lot to you (retire with a paid for house and ZERO debt), ESPECIALLY if you were reinvesting dividends the whole time. People who invoke the "real terms" thing are either doomsdayers or permabears or just pessimistic.

My house has been paid for and my debt zero for ~14 years. Bought the house 24 years ago, 6 years ago it was supposedly valued at ~300% of my cost basis, currently it is worth maybe 50% of that. It is never going to come back. When you throw in the taxes confiscated from me to put your kids through school it will be a complete loss. How's that for "real terms".

The market is only at new highs due to the Fed manipulation of interest rates and printing press operations. Too much funny money and only one place to put it.

Flagpole wrote:

2) I reject your analysis anyway. Dow in 1964 was 834.05. Dow in 1984 was 1178.48, and yes, while I understand you said "real terms", I still reject. If you are working toward retirement, you can greatly affect "real terms" so that a Dow increase still means a lot to you (retire with a paid for house and ZERO debt), ESPECIALLY if you were reinvesting dividends the whole time. People who invoke the "real terms" thing are either doomsdayers or permabears or just pessimistic.

Good point. I REJECT inflation. Does NOT exist. I still buy milk for 59 cents a gallon and I REJECT these pessimistic, doomsaying price setters at the grocery store.!

That's hilarious. Could you possibly believe the things you write? I have my doubts.

But then again, you are the same person who did not understand what mutual fund dividends are or what their impact is on your wealth. And then you called a very simple, accurate description of such dividends that agip provided to help you understand some very basic concepts - what was that word you used again? Pessimistic? Doomsaying?...?

Truly hilarious. A troll of some artistry!

The problem with gold is that you can't go back past 1971 without being in a drastically different market. For example if we look at the last 200 years in inflation adjusted returns 10K in stocks: 5.6 billion 10k in gold: 26,000But that does gold a disservice for the first 150 or so of those years gold had a negative return (it was worth 19.39 in 1800 and 20.67 in 1900 and only 44.60 in 1970) and then since 1970 if you measure form troth to peak (maybe) you get a nice return. But you have to ask your self are you buying at a bubble top or at new support level? After an asset goes up 500% (Imagine if the S&P was at 5500 instead of 1800 or if you calc from the bottom at 3600), it seem likely you are closer to a peak but that is just a guess. Maybe this time is different and gold is going to 10k. But I doubt it. The obama stock market has had some nice returns but they pretty much just put use back on the 10% trend line that stretches back to the 30s. After market crashes (see 2008), you tend to get a rebound a couple years later. If that rebound lasts another 3 years or ends tomorrow, no one can tell you. Personally I expect the normal 10-20% correction in the next 24 months but I have no clue if the market is going up another 30% before that happens or not.

false economy wrote:

I would laugh my *ss off if the stock market completely collapsed.

All those stock traders, insurance agents, bankers, etc who don't do any real work, looking down upon me when I come home from a 12 hour day at the factory.

I could survive in the wild for years.

They couldn't survive without their TV remote.

You Da MAN!

In all fairness agip, you can't use a meaningful benchmark in your case either, as Gold wasn't released by the dollar until 1971.

So using 1926 would be a fallacy as well.

Tell you what, I'll do this for you...what was Gold in 1971 and what was the SP500?

Guess which has won since then...

Gold: 37.88

SP500: 95.88

http://stock-chartist.com/2011/03/gold-and-s-500-since-1971/

Gold is an investment that is just as important as any stock benchmark, and it has been this was since 1971. Goldbugs will say since ancient times, but ignore them, they're like stock bulls that never shut up. The truth is both are investments, and when its time to switch out of one, its usually time to switch into another.

which is why I always say you switch from one to another to make consistent money.

Unfortunately you can't do that with shorting the market today, you'll just get nailed when the market goes up 15%. But the real thing to own would be gold, which could go up 100%.

Anyone going into investing with only one game plan is asking for only one outcome; under performance.

No, I did this math higher in the thread. From 1/1/71 to today, the sp500with divs reinvested beats gold by a couple percent per year.

What's the obsession with gold about? I don't see what makes it more special than any other commodity.

Kevin52 wrote:

My house has been paid for and my debt zero for ~14 years. Bought the house 24 years ago, 6 years ago it was supposedly valued at ~300% of my cost basis, currently it is worth maybe 50% of that. It is never going to come back. When you throw in the taxes confiscated from me to put your kids through school it will be a complete loss. How's that for "real terms".

The market is only at new highs due to the Fed manipulation of interest rates and printing press operations. Too much funny money and only one place to put it.

1) Does your house create INCOME for you? If not, and you need a place to stay anyway, then who cares? I suppose you might want to sell it when you are older to help pay for some elderly care. Well, at age 60 you should be buying Long Term Care insurance to help with that.

2) I reject the notion that your house will never come back. Unless you are in Detroit or some other area that has been hit unusually hard (like industry leaving), then it will come back. BUT, there are exceptions. Perhaps yours is the exception.

3) We all pay taxes...get over that.

4) Finally (regarding your house), I don't care too much what a house GOT TO...I'm more interested in value today vs. what you paid for it (selling price).

5) The Fed manipulation is all baked in at this point. In fact, the big uptick last week happened when it announced it would start to back off.

6) The stock market growth right now is due to company profits and predicted strength going forward. 2014 will be another good year for stocks.

does it? I would expect them to be close to even.

37.88-1210

95.88-1841

What reinvestment methodology are you using? This doesn't work:

http://dqydj.net/sp-500-return-calculator/

Also, are you deducting transaction fees and costs? These things are very hard to determine over 40 years.

Ho Hum wrote:

What's the obsession with gold about? I don't see what makes it more special than any other commodity.

can you read? Its a hedge against the market. The two are intrinsically linked, one outperforms the other for long periods of time, allowing someone going back and forth to profit immensely.

I would expect that Gold at 1500-1750 in 2012 and earlier this year was ahead of total return SP500 from the past 40 years, but is now slightly behind at with it at 1200 and the SP500 making a new high at 1841.