Thoughts on economic conditions

Blimey

Blimey

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Ladies & Gents, I thought it would be time to bump this thread, so we can all (including me!) use it as a learning opportunity. I want to start out by saying on another forum I posted a thread back in around 2010 or sensing that the economy was about to take a dump and predicting that the market would go down. So, I'm worse at predicting the economy than anybody in this thread. However, I'm juuuust wise enough not to take my own advice, and defer to those who say we can't predict the market. And so, I stayed heavy in stocks through the biggest bull run in history (arguably).

Since this thread was created the S&P 500, including dividends, is up 25%, gold is down 5%, silver is down 25%.

As Snappo mentioned in one of his posts if you just keep dumping money into stocks long term you'll do well. I see this anecdote thrown around a lot: The inspiring story of the worst market timer ever the moral of this story is forget what the market is doing and buy it.

I do think it's fine to have assets built up in other ways. Snappo's doomsday retreat sounds awesome. I'm also contemplating putting a very small amount into gold or silver, partly just to have something to stare at like smeagol. The return on precious metals is historically horrendous. But most of my net worth is and will continue to be in equities. Most is in the S&P 500 and whether that hits 3000 soon or 1500 I won't change it. I'll keep piling money in. The historic return on it, through everything, is around 10%. That's pretty good, and if we ever have huge inflation, it's going to catch up as well. Precious metals are an emergency hedge if things go very badly, but if things go as they always have (and as such probably always will), equities are the place to be. Metals are a hedge, not an investment really. They pay no dividends. Even when the stock market is flat it's not flat due to dividends. Bonds also pay out. They differ from metals in that your money is working, not sitting there lazy.
 
Catskillkid

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Blimey said:
Ladies & Gents, I thought it would be time to bump this thread, so we can all (including me!) use it as a learning opportunity. I want to start out by saying on another forum I posted a thread back in around 2010 or sensing that the economy was about to take a dump and predicting that the market would go down. So, I'm worse at predicting the economy than anybody in this thread. However, I'm juuuust wise enough not to take my own advice, and defer to those who say we can't predict the market. And so, I stayed heavy in stocks through the biggest bull run in history (arguably).

Since this thread was created the S&P 500, including dividends, is up 25%, gold is down 5%, silver is down 25%.

As Snappo mentioned in one of his posts if you just keep dumping money into stocks long term you'll do well. I see this anecdote thrown around a lot: The inspiring story of the worst market timer ever the moral of this story is forget what the market is doing and buy it.

I do think it's fine to have assets built up in other ways. Snappo's doomsday retreat sounds awesome. I'm also contemplating putting a very small amount into gold or silver, partly just to have something to stare at like smeagol. The return on precious metals is historically horrendous. But most of my net worth is and will continue to be in equities. Most is in the S&P 500 and whether that hits 3000 soon or 1500 I won't change it. I'll keep piling money in. The historic return on it, through everything, is around 10%. That's pretty good, and if we ever have huge inflation, it's going to catch up as well. Precious metals are an emergency hedge if things go very badly, but if things go as they always have (and as such probably always will), equities are the place to be. Metals are a hedge, not an investment really. They pay no dividends. Even when the stock market is flat it's not flat due to dividends. Bonds also pay out. They differ from metals in that your money is working, not sitting there lazy.
Click to expand...

I was about to come on and ask what mo-fo resurrected a two-year old thread. But since it's you, I'll forgive ;).

I recently bought my father a silver dollar (WWI Centennial) for Christmas (he collects coins) and while perusing the US Mint and other coin websites saw a bunch that look really cool and am thinking about getting a few for myself. It can't hurt to have a (very) small amount invested in precious metals. But like you, I'm getting it mostly because it looks pretty and to say I have a gold coin Mother f-ers...lol!

Years ago in college I read Grendel by John Gardner. Basically it's Beowulf told from the perspective of Grendel. In it the Dragon had very solid advice for Grendel (and anyone else for that matter): Find gold and sit on it.
 
Blimey

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Catskillkid said:
I was about to come on and ask what mo-fo resurrected a two-year old thread. But since it's you, I'll forgive ;).

I recently bought my father a silver dollar (WWI Centennial) for Christmas (he collects coins) and while perusing the US Mint and other coin websites saw a bunch that look really cool and am thinking about getting a few for myself. It can't hurt to have a (very) small amount invested in precious metals. But like you, I'm getting it mostly because it looks pretty and to say I have a gold coin Mother f-ers...lol!

Years ago in college I read Grendel by John Gardner. Basically it's Beowulf told from the perspective of Grendel. In it the Dragon had very solid advice for Grendel (and anyone else for that matter): Find gold and sit on it.
Click to expand...
I'm gonna pick some up to look pretty and put it in my SHTF movie-fantasy cache, but I read something by a guy last week who said that he invested $10k into gold in 1979 or so because he was sure it would hit $2000/ounce. He still has that gold today and it's worth under $30k. That same money, had he put it into the S&P 500, would be worth a few hundred thousand $$ :)
 
tirwin1

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Blimey said:
I'm gonna pick some up to look pretty and put it in my SHTF movie-fantasy cache, but I read something by a guy last week who said that he invested $10k into gold in 1979 or so because he was sure it would hit $2000/ounce. He still has that gold today and it's worth under $30k. That same money, had he put it into the S&P 500, would be worth a few hundred thousand $$ :)
Click to expand...
Diversity is the key. There were a few years where gold was a great investment. It tends to do better when the economy is tanking, like after 2008. For the past 4 years it has traded in a range between $1,100 and $1,300 while the stock market did quite well. That trend might reverse in the next 4 years. Maybe. It's always best not to put all your eggs in one basket. Have some in stocks, some in gold/silver, some in bonds and some in cash. If you want to put up with the hassles of being a landlord real estate is also a decent option. For many their home will be the extent of their real estate investment. There is a guy I follow who predicts gold going to $10,000 an ounce when the next economic debacle hits. He makes a plausible case but the fact is he's been wrong for 4 years.
 
Blimey

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tirwin1 said:
Diversity is the key. There were a few years where gold was a great investment. It tends to do better when the economy is tanking, like after 2008. For the past 4 years it has traded in a range between $1,100 and $1,300 while the stock market did quite well. That trend might reverse in the next 4 years. Maybe. It's always best not to put all your eggs in one basket. Have some in stocks, some in gold/silver, some in bonds and some in cash. If you want to put up with the hassles of being a landlord real estate is also a decent option. For many their home will be the extent of their real estate investment. There is a guy I follow who predicts gold going to $10,000 an ounce when the next economic debacle hits. He makes a plausible case but the fact is he's been wrong for 4 years.
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I've thought about real estate. I'd love to have a few units but I feel the hassle involved and something about my personality that would make me very ill-suited to tenants not paying me and/or taking advantage of me, I've yet to go that route. But a few units would serve you better during a big recession than stocks, which could drop 50%.

True what you say about people's extent of investments. A lot of people's net worth is primarily in their home. This is not because homes are a good investment (in my view), but because most people just don't bother investing much!

The gold coin I want is the new canadian mint one. I didn't realize that counterfeit gold coins are a thing, and Canada has put cool watermarks, etc. on theirs to limit this (I know there are far simpler ways to identify fake from real, though).
 
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