Investing 102

[Sieg]

Originally Posted by GregWeld

Yeah -- I'll go through beautiful downtown NIKEVILLE on the 26th --- 'cause Charley would be mad if I'm late.

Regarding the old guy dividends..........that's only 4490 gal. of tow rig fuel.

[Tony_SS]

Originally Posted by GregWeld

I've just rolled in from RTTC a couple hours ago and am a bit "rummy" -- but wanted to respond to your gold question.


My feelings about any investment in precious metals are the same - gold or silver etc.

Basically I think there are two trades here -- SPECULATIVE --- which means you're HOPING it goes up from where you bought...

OR

A person is a fatalist -- and sees the world coming to an end and Gold will be the only currency.


I'm not a speculator.... and I don't see our economy becoming so bad that I'll have to use gold as a currency. If I'm going to speculate that the price of an investment is going to go up == then I want to get paid while I wait for that to happen. Dividend stocks or apartment complexes - or commercial real estate are far better long term "speculations" IMHO.

If I thought the worlds currencies were going to collapse --- then I'd have to have ALL my money invested in gold - and I'd have to take possession of it - and probably build a bomb shelter and stock food and water.

But that is also why I own everything I "have" - house - cars - etc. Nobody can take that away from me even if EVERYTHING goes south.

Isn't that what all stocks are? We are speculation that these babies will go UP!

In the last 10 years, things have been quite volatile.. look at the crash of 2008. And now, there is chatter of something like this happening again soo...

Look at this 12 year chart:


I think Gold/Silver are a good hedge against inflation and protection. But other are seeing it as a 'bubble' like that of the 80's... Who knows. I'm guess all this QE1 2 and 3 and inflation (cost of food and energy) has me leary of jumping into stocks without some sort of hedge like PM's.

[GregWeld]

^^^^^^^^ Everybody has and is entitled to their own opinion - on anything. That is exactly what makes a market.

My "opinions" posted in this thread are for INVESTING 102 -- and I write with that thinking cap on.

Many reading this thread are just beginning to invest, or are adjusting their investments. To jump into PM's as a hedge or anything else is INHO inappropriate. The levels of investment in something such as gold, to actually hedge against inflation would need to be around 30% of a investable portfolio.
At the levels of most investable funds that are reading this.. that wouldn't be a wise move.

Now -- if you want to hedge against inflation... look at the 10 year chart of McDonalds -- and overlay GLD (a gold ETF) -- and then make a comparison... and the real difference is that MCD paid out real cash on top of the share price growth.

I'm throwing this out there as a "talking point" only. This is how people learn about various investments. My point is that a person would have done just as well in a dividend payer like McDonalds as they would have in Gold...

On a total return basis, gold has had an average annual growth rate of 8.47% (1973-2010), while the S&P 500 TR Index has had an average annual growth rate of 9.84%... so holding gold over the S&P 500... you went behind.

People buy gold when they're scared. I just don't buy into fear. If you listen to the ads touting "buy gold now" - that's exactly what they're pitching.

[GregWeld]

Originally Posted by Sieg

Regarding the old guy dividends..........that's only 4490 gal. of tow rig fuel.

I eat light!

[Bucketlist2012]

Although I do hold PM,s and I have done very well with them, research shows you can fight Inflation with Stocks..

I have had to take a lot of profit from PM's so i would not get overweight, and I put the money into dividend stocks..

Anyone doing anything out of fear, buying or selling , is wrong, and if you have been "speculating ", or believing things will be a certain way, then I believe it works if you don't dedicate too much of your Portfolio to it..And long may not be as long as you think..

The bulk of the portfolio should be in solid, diversified companies..But I was into metals a while ago, so now we may be going up or we may be taking a hit soon..

[GregWeld]

I become overly "cautious" when "everyone" is doing something. It was even brought up earlier in this thread that "everyone" is suddenly talking about dividend investing... and that is absolutely true. Many have been dividend investing for years... it's the original "blue haired old lady" investment and this goes back years and years. So it's being "re-discovered" - which can also create a 'bubble'.

I have stayed out of Apple of late... because it's the only thing the talking heads can talk about. That always gives me 'pause'.

[Tony_SS]

Originally Posted by GregWeld

I become overly "cautious" when "everyone" is doing something. It was even brought up earlier in this thread that "everyone" is suddenly talking about dividend investing... and that is absolutely true. Many have been dividend investing for years... it's the original "blue haired old lady" investment and this goes back years and years. So it's being "re-discovered" - which can also create a 'bubble'.

I have stayed out of Apple of late... because it's the only thing the talking heads can talk about. That always gives me 'pause'.

Same here Greg! Gold was/is quite poplular and its what lead to the $2000 grand bubble, IMO. So I think the bottom is a good time to buy. It's out of my league, but I do collect silver as a hobby and long term investment/hedge.

However, if anyone wants a lead on stocks, IMHO, invest in those firms that the Federal Reserve bailed out in secret. Partial audits revealed those, and McD's was one of them. With a backer like the Fed, you're sure to win. That's my strategy when I plan to jump in.

Appreciate the convo and insight.

[Tony_SS]

Originally Posted by solarguy09

research shows you can fight Inflation with Stocks..

I can agree with that.. I think that perhaps why we seen the stock market go up is partially due to inflation.

[GregWeld]

Originally Posted by Tony_SS

Same here Greg! Gold was/is quite poplular and its what lead to the $2000 grand bubble, IMO. So I think the bottom is a good time to buy. It's out of my league, but I do collect silver as a hobby and long term investment/hedge.

However, if anyone wants a lead on stocks, IMHO, invest in those firms that the Federal Reserve bailed out in secret. Partial audits revealed those, and McD's was one of them. With a backer like the Fed, you're sure to win. That's my strategy when I plan to jump in.

Appreciate the convo and insight.

That's my only "fear" about being in Gold... is that when all the TV talking heads are speculating about it's next move -- that scares me... and when RETAIL investors think it's a "SURE BET" -- that scares me even more... I've lived through the dot bombers -- the housing bust -- etc and every time everyone was sure that "whatever X" is was going straight up from here (an already lofty level) disaster seemed to be right around the corner.

Of course what we have to do in this thread -- remembering that it's a 102 thread -- is to learn... and we need to learn our risk tolerances... and how not to get scared out of the market -- and I have to remember that many here were of the "invest and forget" mindset...

What I don't want people to do is to change their investments -- and then suddenly get blown out and give up on investing. When you take on risk - getting blown out is part of that game. The game we're trying to play is invest for long term - getting paid - compounding that over time... and winning the game. I want all these guys to be able to enjoy what I (and others here) are enjoying -- which is being comfortably retired and living the good life in their golden years.

[ErikLS2]

I get that same fear Greg. I can't stop hearing ads on TV and radio from brokers wanting to sell you gold. Was just at my dentist's office and he wouldn't stop talking about buying silver right now. I think if you were going to buy it, buy it in coins or whatever you can hold in your hand. I wouldn't feel safe buying some piece of paper that said I owned gold or silver

Real estate (rental property) can also be a good hedge against inflation, provided you buy it before there's any real inflation taking place, like right now. Plus, unlike with gold or silver, it pays you while you wait, you get a tax deduction by depreciation and it's a fixed asset that can't easily go away (provided you pay your property taxes and insurance). You can even make money on the money you borrowed to buy it if you do it right. It can be hard to sell though but if you keep it in good condition when the inevitable boom happens, it shouldn't be too hard to get out of. Last one I sold at pretty much the peak in '06 was under contract in 3 days and I made a killing. The best thing about investing I think is that if you own something that's just experienced a big upturn, there are plenty of knuckleheads waiting in line to buy it before it goes up more.