this.Gold/silver as long term cash savings (instead of currency and bonds).
Stocks for growth and productive value.
Peace.
great post!
"Paper is poverty,... it is only the ghost of money, and not money itself." --Thomas Jefferson to Edward Carrington, 1788.
WWW.APPLESEEDINFO.ORG
Appleseed Project - "Common folks teaching common folks to shoot uncommonly well"
Teaser are you a$$-backwards........flip your percentages around.......okay the kool-aid is still being passed around....Gold is not an investment, it's a hedge. Putting anything more than ~10% of your portfolio in gold is pointless unless you believe that the dollar is about to crash.
Last edited by xd9fan; 07-27-2011 at 08:27 AM.
"Paper is poverty,... it is only the ghost of money, and not money itself." --Thomas Jefferson to Edward Carrington, 1788.
WWW.APPLESEEDINFO.ORG
Appleseed Project - "Common folks teaching common folks to shoot uncommonly well"
Originally Posted by Brian4Liberty
Sales coming right up.
Actually, we probably have a way to go on the downside. Best buying op may be in the October-December range.
"Foreign aid is taking money from the poor people of a rich country, and giving it to the rich people of a poor country." - Ron Paul
"Beware the Military-Industrial-Financial-Pharma-Corporate-Internet-Media-Government Complex." - B4L update of General Dwight D. Eisenhower
"Debt is the drug, Wall St. Banksters are the dealers, and politicians are the addicts." - B4L
"Totally free immigration? I've never taken that position. I believe in national sovereignty." - Ron Paul
Proponent of real science.
The views and opinions expressed here are solely my own, and do not represent this forum or any other entities or persons.
Uh huh.How did this turn out for you, Jason?
In my opinion, gold or silver should not be considered as an investment. I think it's good as a means for long term savings. One should not purchase gold or silver hoping for significant appreciation of its purchasing power - this is not investing, this is speculating.
My view on stocks is that the stock market is volatile and risky. There are many signs that stocks in general are overvalued. With the very low dividends generally available, then purchasing stocks today could not properly be called investing. If you're purchasing stocks hoping for price appreciation, then this is not investing - it is speculating.
The best investment I suggest today is to learn marketable or otherwise useful skills and/or start your own business.
"There are no solutions. There are only trade-offs." Thomas Sowell
The "stock market" is not the same as equity in companies. It's kind of like lumping a bad company in with the rest and saying "capitalism/free markets are bad!!".
Doing a broad investment plan in the DJIA, NYSE, TSX etc. is monumentally different then hand picking a company and investing (buying stock).
Publically traded companies/indexes are so very different than private equity.
If you hold stock in a truly productive company - what the value of fiat does is irrelevent. The USD could burn to ash but if you own private equity in a 200 old Scotch distillery or a farming company with strong fundementals, a broad public stock market crash is irrelevant to you.
Last edited by Seraphim; 07-28-2014 at 03:04 PM.
"Like an army falling, one by one by one" - Linkin Park
Investing is putting money into an asset with the expectation of a return. By it's very nature it is speculative (at least partially).
I agree that gold is more of a long term retainer of value/purshasing power, but it does have investment properties. Silver has even more investment potential/properties.
"Like an army falling, one by one by one" - Linkin Park
Here is how I define investing and how I distinguish investing from speculating:Investing is putting money into an asset with the expectation of a return. By it's very nature it is speculative (at least partially).
Investing is when you accept the rate of return on the market that anyone can get. Any Schmoe. You. Merrill Lynch. Joe. Your cat. Anyone can get this rate of return with no special knowledge nor training.
Speculating is when you try to beat the rate of return available on the market.
That gives the two terms good, solid, non-subjective definitions. Instead of just being fuzzy and subjective. What do you guys think?
I thinks it's good, and I appreciate a clear definition. It doesn't matter so much what the definitions are so much as we are all using the same ones. Otherwise, we may as well be trying to communicate in different languages.
When I wrote speculating, I mean specifically speculating on price appreciation. This is what went on during the housing bubble - and generally characterizes all bubbles. A healthy stock market should show a stable price index. Appreciation in a price index is a symptom of currency expansion. I believe purchasing stocks hoping for yields based on price appreciation should be distinguished from the historical practice of yielding a return from dividends. A good argument can be made that "investing" in this environment must be done with price appreciation as a primary goal. However, I then wonder, is genuine investment possible in this environment where capital on net balance is likely being destroyed? That's a tough one.
Last edited by buenijo; 07-28-2014 at 07:01 PM.
"There are no solutions. There are only trade-offs." Thomas Sowell
You have your definitions mixed up.
An investment is anything you park money into with the expected notion that you will get a real return above the real inflation rate.
You can be a pure speculator parking money in US Treasuries - perceived as the least speculative "investment" one can make.
In fact, these days, most people invested in government bonds of the "strong" governments are classic examples of speculators. The speculation is that both the principal and the paltry 2.4% yield are safe and a sure thing.
ANY expected return on capital is an investment. From there, the degree of speculation has to do with fundamentals and the expected result.
A gold investor from 2008 who thinks by 2020 the gold will be 1250% higher in USD but only 15% higher in purchasing power has little overall speculation relative to general market expectations of return.
Fiat screws things up. Real rates of return are the only things that matter. Since the government and central banks OPENLY target inflation, EVERYTHING is a speculation. Period. End of story. Speculation/investment become synonymous by default and they then become a matter of degree, risk and true outcome.
"Like an army falling, one by one by one" - Linkin Park
In a financial sense, "speculating" usually means taking on very high risk. "Investing" (trying to get some sort of return on your money) can include speculating.
Well , gold is no bargain now , but has been in the past , as early as 7 months ago , most likely , an avg stock is crap , I still bought some , but not what you will normally see as suggestions .
No one has mentioned BTC here. Does Bitcoin deserve any portion of a portfolio?
Hey thanks, and yes, I agree about definitions.
But if you're invested in a broad asset category -- let's use real estate, since that's the example you are using here -- you are not going to do any better than all the other millions of people invested in it, but neither will you do any worse! And that's really important. So if you want to invest in real estate, the way to do it would be to buy into large, established REIT index funds. Then you can get whatever kind of performance or characteristics which are found in real estate (for instance, generally doing well during periods of moderately inflationary prosperity) which are important to you as an investor.When I wrote speculating, I mean specifically speculating on price appreciation. This is what went on during the housing bubble - and generally characterizes all bubbles.
If you, on the other hand, bought an individual piece of property with the expectation of outperforming the real estate market in general, you would be speculating. This is like the practice of hand-picking stocks that Seraphim is a fan of. Because you have done your homework, done the research, found a good deal, etc., you think you can do better than some ignorant Joe the Plumber just plunking down in a simple REIT index. The upside to doing things this way is that you can do better than the market as a whole. The downside -- almost always ignored! -- to doing things this way is that you can do much worse than the market as a whole.
One big factor exerting downward pressure on dividends is US taxation policy. As a taxable investor, it is much better from a tax point of view to get the long-term price appreciation than to be getting paid dividends every year which you must turn around and pay taxes on. So people and businesses have figured this out. If I can get the same return one way or another way, I will choose the way where I don't have to pay Uncle Sam as much.A healthy stock market should show a stable price index. Appreciation in a price index is a symptom of currency expansion. I believe purchasing stocks hoping for yields based on price appreciation should be distinguished from the historical practice of yielding a return from dividends. A good argument can be made that "investing" in this environment must be done with price appreciation as a primary goal. However, I then wonder, is genuine investment possible in this environment where capital on net balance is likely being destroyed? That's a tough one.
Yes, and what does that even mean? What is a "very high risk"? Can you define it for me? Can anyone?
Investment gurus throw around these terms like they mean something, to create the impression that something has actually been said. When in reality, it hasn't.
That is certainly possible! This is a case where the words themselves -- investing, speculating -- do not necessarily have clear, useful definitions which are widely accepted. And so I have chosen to define them in a way which is clear and which is highly useful to me.
Risk can be mathematically measured. While it is not a guarantee of what can happen in the future, they look at how often in the past you would have made/ lost money from a particular type of investment. The less often you made money in the past, the higher the risk against making money in the future. Bonds (when held to maturity) have a guaranteed return (unless they default) while things like commodities or "junk bonds" for example are more volitile and have a lower chance of a positive return in the future. In order to be willing to take on riskier investments, investors usually want the promise of a higher return if things do work out (such as higher interest rates that junk bonds have to offer vs the interest rate on US Treasury bonds which have a much lower risk of default- not getting paid).
Risk is relative- true I cannot give you an absolute number above which always means "high risk". But that does not mean there is no such thing. Jumping off a bridge is high risk. Sleeping in your bed also carries risk of death but that is a much rarer event so it is considerably lower risk activity.
Oh really? You are just full of revelations. What is the mathematical risk that the stock market will crash by at least 15% this year? Can you tell me? No?
Can you tell me the mathematical risk of any event that would be useful to me in investing?
I haven't made such calculations myself so I can't say what they are but others have. Diffferent people will have different risks they are more concerned about so they may come up with different relative risks for things. A thrill seeker may find jumping off a bridge a sane and fun activity and spending all day in bed a waste of time. A thrill adverse person would rather stay in bed.
Sample: http://www.stocktradingtogo.com/2009...le-volatility/
More at link.5 Ways to Measure Investment Risk
Most of these articles have dealt with how investors make decisions about which assets to buy and when to sell them. Financial theory tells us that we should aim to create portfolios whereby we maximize gains for a set level of risk. This is easy to understand, but it leaves open one general question—how do we define risk?
Finance literature largely describes risk as volatility of returns. Based on my experience, I find this definition inadequate. When markets are moving higher and people are making money, risk is often discarded. After all, many people say they would rather make a rocky 20% than a predictable 5%. However, when prices fall investors take the opposite view and huddle in the corner wishing to not lose another dime.
Last edited by Zippyjuan; 07-29-2014 at 12:46 PM.
They might as well be looking at crystal balls. I asked:
Can you tell me the mathematical risk of any event that would be useful to me in investing?
You can give me no such number, because there is no such number. It's unknown.
This is not mathematics. You can measure all kinds of things in the past. Yes. But you know what?
"it is not a guarantee of what can happen in the future"
I can tell you what the volatility numbers were for the US stock market 1922-2013. But I cannot tell you what the "risk" number is of anything. There are no such numbers. People sometimes make up numbers relating to risk, such as probabilities that various things will happen. These are just made-up. They don't know. Nobody knows. It's an art, not a science.
Risk is calculated all of the time. Insurance companies are big calculators of risk. They want to know the odds that they are going to have to make a payout and how big it is likely to be so they know how much they need to charge in premiums so they make money over and above what they have to pay out. They aren't going to "just make things up". They are placing a bet that you will give them more money in premiums than they have to give back to you in payouts and they want to hedge that bet as well as they can by looking at how risky you are (how likely you get a payment from them). If they make the wrong choice on risk, the go out of business.
If you borrow from a bank, the assess your risk of paying them back. They look at your job history and credit history. If you are not as good at paying your bills as somebody else, they will charge you a higher rate- a "risk premium" than somebody with a better record of making payments.
Different bonds and loans have different interest rates. Why? Investors see different risks that they will get paid back by the person they lent the money to (the bond issuer). Same for loans to individuals and companies. A "risk factor" is applied. Higher risk of getting the money back means you need a bigger return so that if you do lose money on one going bad, you can make up the difference on the ones which do pay you off. Yes, it is mathematics.
You may not crunch numbers but you yourself make risk calculations all of the time. You choose between different investments. Why pick one over the other? Because you feel one offers a better chance at a decent return than another (or a lower risk of losing money on it).
Measuring risk is trying to calculate the odds of something happening- good or bad.
Last edited by Zippyjuan; 07-29-2014 at 01:06 PM.
I am not rejecting the concept of risk.
I am objecting to you writing, quote: "In a financial sense, "speculating" usually means taking on very high risk," as if that means something.
Was your objection to the "very high" part? Perhaps "higher risk" would have been better?
Though you did argue that you cannot measure risk.
If not, perhaps you can elaborate more on what your objection was. Thanks.Can you tell me the mathematical risk of any event that would be useful to me in investing?
You can give me no such number, because there is no such number. It's unknown.
This is not mathematics.
What you wrote is just very subjective and meaningless. What is a "very high risk"? Can you define it for me? Can anyone?
Higher risk would be better, but only if you also answer higher than what? Otherwise it is likewise meaningless and useless.
You are throwing around these terms like they mean something, to create the impression that something has actually been said. When in reality, it hasn't. Your post said absolutely nothing that told me anything of any value, in my humble opinion. I read your post, asking myself "what can I learn from this that will help me in investing?" and I come up with nothing.
So my question is, what's the take-away, Zippy? What's the solid advice? Where's the beef?
I made no suggestions as to what you want to invest in- you make those decisions. I also don't have to tell you any number of what a risk is- you are making those calculations yourself (even if you don't run the numbers you are still weighing relative risks). If you feel something has too high of a risk, you don't invest in it. Some people like higher risk because it offers the potential for higher returns if it pays off- along with more risk of losing on it. Some are risk adverse and want to be as safe as they can be with their investments. Most combine different levels of risk.
You offered a definition of speculation- what does that tell you you should or should not invest in? Where is your solid advice?
But thank you for better explaining what your real concern was in my post.Speculating is when you try to beat the rate of return available on the market.
Last edited by Zippyjuan; 07-29-2014 at 02:37 PM.
No one asked for it (on this thread). Do you actually want any? No.
I see. You would like some investment advice from me since you are upset that my definition did not include any (yours did not either). Sorry to disappoint. It was not intended to be included.
But if you did want some advice, I might suggest an index fund- pick your own category. They offer the lowest cost investments. Higher costs lower returns. Since a market is the sum of all investors, the average investor will get the market average return. But when you include costs (transaction costs, taxes, fees, etc), the average investor actually will do worse than the market average. The higher the costs, the farther below the market average return you fall. I also like dividend paying stocks like utilities with steady payouts. Guaranteed (as much as they can be guaranteed) returns in addition to any appreciation in the share prices. In that case, get a DRIP fund (Dividend Re-Investment Plan). DRIPS are the lowest cost investments. The money it gets in the form of a dividend are rolled over into buying more shares at little to no additional costs (costs of purchasing additional shares are also typically extremely low too- but they can vary by the individual stocks- read the facts on them before investing).I read your post, asking myself "what can I learn from this that will help me in investing?" and I come up with nothing.
So my question is, what's the take-away, Zippy? What's the solid advice? Where's the beef?
Or you can speculate and take on higher risks with the hopes of beating the market average (which is impossible for the average investor to do). It is very difficult to consistantly beat the market average.
Last edited by Zippyjuan; 07-29-2014 at 03:08 PM.
No, Zippyjuan, I merely wanted to politely point out that your statement was vacuous. Mission accomplished.
This is excellent advice, and is, of course, the very advice implied in my contrasting definitions of speculating and investing. You would know this if you ever read any of my many, many posts on the topic. Also if you had any interest whatsoever in mutual understanding and actual communication. However, I have never observed you to show the least bit of interest in what anyone else on this forum thinks. Not once.But if you did want some advice, I might suggest an index fund- pick your own category. They offer the lowest cost investments. Higher costs lower returns. Since a market is the sum of all investors, the average investor will get the market average return. But when you include costs (transaction costs, taxes, fees, etc), the average investor actually will do worse than the market average. The higher the costs, the farther below the market average return you fall.
Or you can speculate and take on higher risks with the hopes of beating the market average (which is impossible for the average investor to do). It is very difficult to consistantly beat the market average.
Why is that?
Posting Permissions
Reply With Quote
Connect With Us