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Interesting Times
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I could put on this bio my education, work experience, investment strategy, and a nice thin (if I can find one) picture of me in a suit looking *smart*. Sorry but that's not my intent here. Sure I invest, help family make financial decisions, and make a ton of mistakes along the way. But my time... More
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Interesting Times For All Commodities And Investments!! CHAPTER 4......
  • Interesting Times For All Commodities And Investments!! Chapter 29............  258 comments
    Jul 25, 2013 7:23 PM

    What started out as a small group discussing anything related to investing has grown extremely educational over the last few months.

    We have Authors, Financial Advisors, Seasoned investors, Experts in specific fields, and just the average Joe pitching in...

    Folks.. we are growing and posters like it. If you are new to investing then this site is for you.

    Here is the link to the READING MATERIAL !!http://seekingalpha.com/instablog/5038891-interesting-times/1998262-interesting-times-for-all-commodities-and-investments-reading-material

    HERE IS THE LINK TO THE PORFOLIO EXERCISE !!http://seekingalpha.com/instablog/5038891-interesting-times/2054352-interesting-times-for-all-commodities-and-investments-portfolio-exercise

    HERE IS THE LINK TO THE CHAPTER ON CDC, WHO, MACRO AND POLITICAL COMMENTS!!http://seekingalpha.com/instablog/5038891-interesting-times/2070972-interesting-times-for-all-commodities-and-investments-cdc-who-macro-and-political-discussions

    I am going to be the first one to admit that I haven't a clue when or if Gold and Silver will ever take off in price. I invested thinking they will though. Additionally I don't see much coverage or articles pertaining to the other commodities. So I started a blog where every commodity, and every investment is on the table for discussion. Even political questions. I only ask that you be courteous!!

    Someone posted the difference between being smart, foolish, and a moron. Well I have been all of the above and I will "man up" and admit it! However I came away from those experiences with both battle scars and knowledge.

    For years I have been reading basically any day now Gold and Silver will explode. I am by far a gold or silver bug. Yet somehow the can gets kicked down the road and I live to learn another lesson. Then Sprott's ETF'S (NYSEARCA:PSLV) are talked about as being safer then others (NYSEARCA:GLD) and (NYSEARCA:SLV).

    With all the QE'S basically not creating any new jobs what will be the consequences in the future?. Will we be "CYPRUSED "? Are we in a serious stock market bubble? Obviously we read daily about these concerns but what about other INVESTMENTS? Here is where most of us are uninformed and relish an education.

    Individual stocks are fine to discuss as well. All of us know that commodities should only be a % of your portfolio. I owned (NASDAQ:PSEC) and liked the dividend. Others may not ! So please feel free to entertain your picks and why!

    REE'S have been an interest for a few of us over the last couple of years. I had exposure to Lynas (OTCPK:LYSCF). Some posters might have questions about this group as well.

    If you disagree with a post please bring proof and display your argument. If you agree with a post, find one interesting, or have questions please feel free to respond. We must remember were all in this together. So if you want to talk politics and how it affects everyday life, fine with me!!

    Now if some have an opinion on Copper, Zinc, Palladium, etc. Do not hesitate to post that. Most of us might not understand the post but I am sure we'll be open to learning. Lumber might interest someone and I would like to learn why I should invest in it. PLEASE bracket any symbol as it also allows a reader to click on it and get some data.

    My part time job is a college and high school official so I can sit here and referee all day long. I honestly hope that ALL will be professional with their comments. So lets see who comes on board. Looking forward to what can become a nicely knit group of diversified investors.

    I have invited a few Authors whose work I admire to bring their expertise to the forum here as. Eric, Hebba, Doug to name a few, in no particular order, will drop in once in a while to voice their opinions. Please feel free to ask your favorite Authors to join in the discussion.

    These are highly recommended people that I suggest you follow as well. I have learned a ton from them and find their work both challenging and engaging. Two areas that I hope inspire people who normally don't post to now feel free to do so !!

    Now I also feel compelled to encourage the use of the like button. It is human nature that once someone posts and see the like button add up they will feel they made a valid point. Upon that feeling they will post again! So if you do like what someone posted, either a question or an answer PLEASE use it ! It might help our core grow exponentially as well

    LURKERS , we are waiting for you to post here too!

    We are living in some very INTERESTING TIMES !!

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: Posting politely Is strongly suggested. Violators will be prosecuted !!

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Comments (258)
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  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » Ok, lets move on and list some gems that investors should be looking at ?
    25 Jul 2013, 07:25 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @TACK

     

    This one is for you since you like to answer questions. Some just don't believe you are averaging 18 to 20% annually for 15 years .Personally I thought you once posted you have been investing for 40 years but I may be incorrect.

     

    So I really want you to prove them wrong. It is simple. You chose NOT to participate in the portfolio exercise which is fine.

     

    But I am sure you should have no reason to list your 10 next no brainers to invest in. You can wait until you find those beaten down value stocks you love. Just post the symbols so ALL can follow and see how you do.

     

    I must admit some are calling you the next Bernie Madoff and I have defended you. But it is curious that you never list a specific stock you buy. Why is that?

     

    Some could care less what your approach is, but FEAR, BLUESKY,SOUTH, TAMPAT, KRUSTY, and others have all listed stocks they have bought. Why haven't you with such a great track record?

     

    We will all wait for your answer.
    25 Jul 2013, 08:15 PM Reply Like
  • BlueSkyForever
    , contributor
    Comments (1410) | Send Message
     
    sooo the gauntlet has been thrown!

     

    Indeed what may these stocks be? Can't wait to hear about them. Maybe Tack can help us pick our stocks for August.
    25 Jul 2013, 09:15 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » BSF

     

    TACK quit as soon as I threw out this challenge. he called me a hypocrite in a PM, then added I should not open chapters with sports questions BUT was the first one to answer them.

     

    He refused to participate in the challenge so I merely asked him just to name 10 stocks we can follow. He bowed out. I wonder why?

     

    Claiming that he averages 15 to 20% returns was too Madoff to quite a few who PM'D me and I was always asked why he never POSTS stocks he buys ..

     

    But the arrogance just got too much for me, I had posted enough warnings yet some believe they are immune to them, One post even goes as far as asking if he posts for SA??
    25 Jul 2013, 10:05 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4529) | Send Message
     
    IT ,
    it seems we have a “double standard” here.. I’m not going to get between your arguments with Tack, but here are some facts.

     

    Your post mentions that Tack, "Quit" because he was reluctant to post any holdings or support to claims of gains over the years.

     

    In fact , if you go back & look , I remember , Tack posting the percentage breakdown of his portfolio to every single sector and type of security, along with their yields.
    I dont know his reasons for bowing out , but have a feeling that isnt one of them .. Consider the following as one of many examples :

     

    Now just yesterday in an exchange with Tampat, where I asked both him & Doug to tell all where there are “short” opportunities to “back “ their claims of impending financial disaster, he replied as follows : ..
    FG,
    “You have no idea what companies I am invested in.
    - I didnt see the memo that said one needed to post their holdings in order to participate in this forum.
    - There are a lot of others who have posted here who don't post their holdings.
    - Singling me out for your digs is real classy, eh.
    - Maybe you can check your ego at the door in the future.”

     

    So now , some can decide not to share their info (perfectly acceptable ) but others are chastised because they don’t .

     

    Everyone can draw their own conclusion,, I have drawn mine ..

     

    Back to Corp. earnings reports.
    26 Jul 2013, 10:23 AM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @FEAR

     

    I should not bother with this at all. But show me ONE stock that TACK posted he bought? Like I said not sectors, a stock.

     

    So let's just move on and I appreciate you always posting your buys and sells. I agree with you that others do not. That is why I try to calm down the comments.

     

    You put your stocks out for all and should not be chastised for it, just like I should not be chastised for trying to get everyone to post politely. I have read the last chapters posts and they did get kinda personal.

     

    I do my best to keep it calm though and not single anyone out. But I will also protect myself when I get accused of things as well. Seems you were doing the same with a few posters. I wish it would stop as it is counter productive. This is meant for all.

     

    No one needs to post their positions nor should anyone knock someone who does. It is really that simple.

     

    Now let's get back to investing,
    26 Jul 2013, 11:53 AM Reply Like
  • tampat
    , contributor
    Comments (995) | Send Message
     
    FG,

     

    "I’m not going to get between your arguments with Tack"

     

    But then you do. You're a funny guy.

     

    So once again you try to drag me into your issues in your post above.
    You seem to like to put people into groups and then proclaim what they stand for. You seem to think anyone who is bearish now is a perpetual bear that has been wrong for years. You are jumping to conclusions without the data needed to support your claims.

     

    Specifically, you asked where are the short oppty's to back my claims of financial disaster. Ya know, thats a common refrain I see often on other threads. For example, read an article about APPL (and other co's) and make a negative remark about it and you get a bunch of 'oh, you must be short, good luck with that' and those types of stupid comments. Why do I need to list short oppty's to back up my claim? One isn't relevant to the other. And besides, you of all people could figure out shorting opportunities for a falling or collapsing market, surely you don't need any suggestions from me or Doug. It was simply a nonsense comment on your part meant to provoke. Ok fine, consider me provoked.

     

    Just because one isn't long a stock doesnt mean they want to be short, it just means they dont want to be long.
    I dont short stocks.
    Sometimes I will buy some put options or inverse ETF's but only as short term trades in my brokerage acct. I have stated this before so pay more attention while reading.
    Contrary to your faulty assertions, I have also mentioned stocks that I have bought or sold or was interested in. And when I did post this info almost no one, (except one or two) showed any interest at all so I stopped doing that.

     

    As for showing a list of the stocks I own, I never did that because, really, I figured I am just another person posting on a blog and who cares what stocks I own.
    I have not made any claims of how well I have done investing over the years like some others, including Tack, and this is what IT was referring to. If I claimed I had made 20% per yr for however many years then someone is justified in calling me out on it, but I make no such claims. IT was perfectly justified to single out anyone who made claims of outstanding success to provide some support to those claims. Its not the double standard you seem to think it is.

     

    In my IRA I only buy. No shorting, no options. Its mostly all dividend stocks. Right now I am about 50% stocks, 50% cash. I will not chase this market any further so I just cant find much to buy right now. You have said exactly the same thing.
    You believe there will be a correction, so do I.

     

    The difference is you don't believe there will be a crash, I do. I am not saying the next correction will be THE crash, I am saying that its coming. No, I dont know when. Europe was on the ropes but they have found a way to kick the can down the road a little further and bought some time thanks in part to the trillions the Fed has given them. Same for the US. The US fiscal policy is one of hope and kick the can. Evidently you really think that will work longer term.

     

    Yes, I absolutely do believe in the impending disaster story.
    My bet is on the govt and Fed officials. They caused the 2003 bubble/crash, they caused the 2008 bubble/crash. The 'recovery' you speak of is a joke. Things being slightly better than 2008 does not a recovery make. Doug is absolutely right, it is an illusion. Get out into the real world and see for yourself what kind of recovery is going on. Detroit bankrupt and many more to come, pension funds under-funded left and right, bubbles growing, simultaneous inflation and deflation, work force participation at depression era levels. The Fed/govt policies are good for the financial elite, a disaster for the rest. The wealth gap continues to widen, the ACA comes online next year, ugh, but nevermind, there is no point and going through this again and listing all the reasons.

     

    As I said, my bet is on the govt/Fed officials. I have complete confidence in them to keep spending on the wrong things, keep kicking the can down the road until we run out of road. My bet is they will screw it up for so long, so badly, it will all come crashing down. We're getting closer.

     

    If in 1998 someone came out and said that within 10 years the Fed and the govt will pursue policies that will bring the entire worlds financial system within a whisker of complete collapse, I suspect you would have laughed at them and labeled them one of your perpetual bears who is always wrong and dismissed the claim as having no merit. Yet thats exactly what happened. It really does baffle me why you or anyone else thinks that it cant happen again. Anyone who thinks that needs to take off the rose colored glasses and pay attention to whats going on. I say not only might it happen, it will absolutely happen again and just as 2008 was worse than 2003, the next one will be worse than 2008. I have total and complete confidence that the actions of the Fed and govt officials will create an even bigger disaster next time.

     

    There is more to investing than just reading company balance sheets and financial metrics, one had better pay attention to govt policies, geopolitics and macroeconomics or they will be blindsided as most were in 2008, except of course, those who participated in creating the problem in the first place and profited greatly in the carnage and probably will next time as well.

     

    Another claim you've made is those who didnt get in the market in 2009 have missed these awesome gains. True dat, but few people got back in the market then, most were shell-shocked. Sure, a few did, good for them, but that is very atypical. And those who stayed in through the fall and rode it out are now finally getting back to even. If one loses 50% of their investment they need a 100% gain just to get back to break even. There are a lot of people, who aren't perpetual bears, who will not go near the stock market but I don't expect you to understand that. Its mostly the financial elite who are reaping the gains and this is not a positive. And your response is well then it serves them right for not participating. Yep, all you unemployed, underemployed out there, the record high 48 million on food stamps, those who cannot afford to lose principal and take the risks of stocks, the elderly, its your own fault for not trusting that stocks will only go up.

     

    The Fed has forced us into stocks or cash and this does make me angry. Another bubble(s) is being blown and I think anyone who doesn't use extreme caution and pay close attention will be hurt the worst. But again, just because I dont like it doesnt mean I dont participate or that I go 'short'.

     

    I'm sure Wall St and their ilk are elated with this, as well as the financially elite.

     

    Like others, it appears your eyes are closed to the possibility of it happening. You seem to look only at the positive data to support your positive views. I try to seek out and both sides of the story. I dont seek out only information that fits my point of view. Look at the authors I follow and you will see a broad range of authors with many different views. I have gotten some good ideas from quite a few. Nevertheless, I am able to form my own opinions and if you don't like or agree with them, so what.

     

    Frankly, I don't understand why a superior financial manager with so much success who knows what and wont happen is even hanging out here on SA posting in blogs and other writers articles. Why aren't you writing articles for SA or magazines or your own book to share your success and expertise with a wider range of people instead of calling out nobody's like me, its certainly not for lack of time. Seems to me it would be like an NBA player playing basketball with high school kids. The NBA player would sure look good compared to them. Hmmm.
    26 Jul 2013, 02:17 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @TAMAPAT

     

    I think you made some valid points, and that is why I have politics as an option for discussion. I agree with quite a few of your arguments.

     

    But I also ask ALL to keep the focus on the comments and not the commenters. I know this isn't easy and the more we all post the more we find faults within the posts.

     

    I might not comment on your stock selections but I always try to look up what people like.. So continue to post what you have interest in.
    26 Jul 2013, 02:54 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4529) | Send Message
     
    Tampat ,

     

    Take your anger out on the FED,

     

    Your comment was used as an example to show the following :

     

    u make a statement that no one needs to show positions & its ok ,(if u read my comment , i agreed with that !!) however when i see another (Tack) getting "called out" for the same behavior - that's nonsense.

     

    your comment was for illustrative purposes --
    Nothing more nothing less.

     

    There are a variety of reason I am involved in SA.. & it doesn't begin or end with writing articles.

     

    u nailed it have a great day !!
    26 Jul 2013, 03:06 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @FEAR

     

    "however when i see another (Tack) getting "called out" for the same behavior - that's nonsense"

     

    Can you explain this comment?
    26 Jul 2013, 03:11 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4529) | Send Message
     
    IT,

     

    Your comment from this morning , after Tack, left this blog .

     

    "TACK quit as soon as I threw out this challenge. he called me a hypocrite in a PM . "

     

    I believe the 'challenge " you stated there referred to his lack of posting any stock selections here .
    26 Jul 2013, 03:16 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @FEAR

     

    Yup, and I really don't want his name mentioned anymore either. I just want it dropped and move on. He has so should we. You posted he gave general sectors and % . Anyone can make that up easily. I asked for SPECIFIC picks and he bailed. Pure and simple.

     

    I made my point very clear about what occurred. So appreciate everyone letting it go. It isn't worth arguing over. Nor do I want to have it rehashed again.

     

    Thanks !
    26 Jul 2013, 03:27 PM Reply Like
  • tampat
    , contributor
    Comments (995) | Send Message
     
    You're right, focus should be on the comments, not the commentator, I may have crossed over the line, no problem, I get it, think I forgot to take my meds today ;)
    26 Jul 2013, 03:49 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @TAMPAT

     

    With my back I have plenty of meds to spare. What do you need? Sleep, muscle relaxants, pain meds, etc?

     

    No worries as I am sure all will calm down once I start whipping butt next week anyway !!
    26 Jul 2013, 03:53 PM Reply Like
  • tampat
    , contributor
    Comments (995) | Send Message
     
    LOL, thanks for the offer, I have a sufficient amount, its just remembering to take them is all....
    Whats that they say, getting old isn't for sissy's...
    26 Jul 2013, 04:02 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » Yup, getting old isn't easy ! I have to actually write mine down but I saw a new doctor this week and he is giving me new hope. Plus a new med of course.. lol
    26 Jul 2013, 04:08 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2727) | Send Message
     
    I posted my calls in the past fears. I'll post call calls in the future too. I posted NUGT and DUST. No Euro calls at present, but I am close to a short call. Close doesn't mean I am, ok?
    27 Jul 2013, 02:24 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2727) | Send Message
     
    Tampat, good dissertation above. There are so many issues that are not just upon us, but Japan, Europe, England, China, Argentina, et al.

     

    From Kyle Bass (whom I am quoting in my book):

     

    "Globally we have gone from $80 to $220 Trillion in just 10 years (11% a year) of credit debt expansion. Global credit market debt to GDP is 360%. Now we are feeling the consequences of this. Private sector leverage becomes a public sector problem. You can't grow your way out of that problem.

     

    Central bank balance sheets have grown at a rate of 17% a year while real GDP has grown at a rate of 3.9% a year globally with only a 1.5% global population increase."

     

    The Keynes lovers gloat at how well we are doing in America. The stock market is not the economy. It's not even the result of the economy.

     

    For the stock market bulls, S&P aggregate Q2 EPS is tracking $0.38 above the season start levels which is why so many that post here are so giddy. But financial make up the bulk of that (thank you Fed). It is the financials that will eventually lead us down.

     

    Good post and analysis.
    27 Jul 2013, 08:35 PM Reply Like
  • CoinsK
    , contributor
    Comments (2736) | Send Message
     
    F& G I do not understand how you can challenge anyone to go short on a certain currency or any trade for that matter. This challenge is so those people can go long or short any stock or product .Can you tell me what you were trying to prove? I mean if I challenged you to short QCom or Apple ,is that fair? Please enlighten me why you needed to present your argument against Doug and Tampat in that form. They are not advocating market timing .Was it just a case of frustration on your part? Sincerely ,Curt
    28 Jul 2013, 07:54 AM Reply Like
  • CoinsK
    , contributor
    Comments (2736) | Send Message
     
    Doug wrote: "
    The Keynes lovers gloat at how well we are doing in America. The stock market is not the economy. It's not even the result of the economy. "

     

    BINGO. And derivatives aren't a good indicator of our economy in ANY way. Yet there are many dollars caught up in them.
    28 Jul 2013, 07:57 AM Reply Like
  • sdavid0419
    , contributor
    Comments (798) | Send Message
     
    IT invited me here as I am a contrarian and right or wrong I post my logic. I agree with you 48 million on food stamps does not look too good until you look beneath the surface. Too many of those people are defrauding the government. They are a part of the underground economy which I'll get too in a minute. Others sell the food stamps or trade them for products food stamps ban like alcohol, drugs, and tobacco. Then there are the millions of illegal immigrants that I favor self deportation over amnesty. Ronald Reagan went the amnesty route and that sent the message to others to keep on coming and eventually they will back door legalize you. Self deportation sends the message that we finally have a meaningful immigration law and are enforcing it. By the way I don't make this stuff up someone I know who is working in the UE tried to pay me money he owed me in food stamps.

     

    Now, for the UE. It used to be for drug dealers and prostitutes. Along comes the 'tea party' with the motto "who would you rather spend your money; you? or the government?" and almost over night we have a huge mass of people working for themselves as PRIVATE CONTRACTOR's and when it comes time to pay taxes they have managed to steal everything they made in all but 2 years out of 7 in which the law requires they show a profit. What are they doing you ask? One of them paved my driveway (for cash payment) at a price one half of the lowest estimate that I had received. Did a super job too. My friend is a head chef in a restaurant that pays him in cash. Then there was the stupid woman that was working in her sister's day care and getting paid under the table and sued her sister on The People's Court for lost income when her sister reported her wages. There are the numerous one time Ebay businesses that have moved to individual local auctions since Ebay began reporting sales to the Feds. All kinds of collectors and hobbyists. Quite a few of the auctionists are buying anything they think they can resell and have perpetual lawn sales. People on busy routes are killing em. Baby Sitters, handymen, etc. I live in Maryland where state taxes are absurd. We are at the point where half of our income goes to federal, state, and local taxes. When you think of all these people getting to keep both halves of their income you can see an alternative reason for the markets to be soaring. These people are being counted among the food stamps (many of them qualify for them) and poor all the while they are living like kings and driving this economy. When the IRS went after the 'tea party' it became a big scandal. Imagine that!!!

     

    As to individual stocks I like to pay attention to PE's and not future ones as the future is promised to no one. I'm very big on railroads right now. I hold CSX and UNP. With my belief that the economy really is thriving even if our government isn't I love Home Depot but can't buy it because others with my same belief have beat me too it and its current PE is way too high. I want a stock where I can begin earning on day 1 and not after those that beat me in get theirs. I also hold OXY which I believe is a spinoff candidate and is still in the right business even if they don't divest. I hold KEY bank only because my grandfather, a very long time ago, told me don't put your money in the bank when you can own it. I've always liked RAIT even though I got burned in their last fiasco with shareholders. It turned out the burn turned into a shine as I loaded up with lots of cheap shares to try to cover my loss and hope for a come back that actually came.
    28 Jul 2013, 09:15 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4529) | Send Message
     
    Coins,

     

    if the end is near , then someone here needs to enlighten us all on how we can take advantage,

     

    if its going to start in europe , do i short the euro, if the eurozone banking system is about to fall apart --give me short candidates that i can complete due diligence on and then possibly short. now i hear its going to start in Japan, should i be looking at the yen , short candidates in their market ?

     

    I heard the spanish banking system was about to fail here on this blog, if so the banks stocks there will plummet , any ideas for anyone on this blog to investigate..

     

    There was a statement made here that our U.S. banks are vulnerable and they will again lead the market down,. Nothing could be farther than the truth , as they have led the market recovery (fact not fiction) and will continue to do so.. The person who made that statement might want to provide us with a list of the most vulnerable ..

     

    Instead i offered my argument for stocks and against gold and decided to act , short gold - No one has to listen, take it or leave it , but its there with some facts.
    http://seekingalpha.co...

     

    now everyone doesn't have to "act ", that's understood, certainly there may be a timing issue , but perhaps providing some specific examples with due diligence to back up the "crisis is coming" talk is needed.

     

    Others here may want to "act" on some pertinent information . Or at least get prepared , if u believe in that scenario , wouldn't that be a logical thing to do ?
    So far , I’ve not heard one single idea presented here to back these statements up.

     

    On the contrary, when someone here presents a case for a particular stock they include their reasoning and ask that others can conduct their own research . I have also noted , those that present an argument to buy an equity related investment are met with counter arguments that debunk their entire investment strategy. All challenged by a very generalized statement. (its all going to end badly) with buzz words like 'Sham" & "illusion" thrown in for good measure.

     

    How about those that portray the "sham" thesis to cite specific examples & tell us how to prosper..

     

    possibly u can now understand my logic in an attempt to get information to back up general statements that are pervasive by the its “all going to fall apart crowd ".& the "Sham & Illusion" folks .

     

    Enjoy the day
    28 Jul 2013, 12:56 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    @ FG & everyone

     

    CoinK's comment was from yesterday when everything was heated up. I'm hoping it will come down today, as I already said to him (further below.)

     

    No one said not to buy equities because of the macro environment. The macro talk is separate from individual stock discussions.

     

    To everyone, if you want this place to be less punchy.... then be less punchy.

     

    Fear: I beg to differ, there are no "sham & illusion" folks. There was someone stating his view. You state yours. And Doug said using sham was a miswording by him. I missed it, if you were told your views aren't acceptable to express. They are certainly appreciated by many.
    28 Jul 2013, 01:47 PM Reply Like
  • CoinsK
    , contributor
    Comments (2736) | Send Message
     
    I agree Curls with it being "Less punchy", I hope that's true. I learn from many different POV's here. Wouldn't want to be on a "Perma Bull or "Perma Bear" site for Gold or Stocks.It takes different views to make it a good place to read and participate. I was frozen out by SA yesterday for some reason,couldn't get on.
    Thought for a while the old saying I have used so many times had become a reality. "I wouldn't want to be in any club that would have me as a member"
    28 Jul 2013, 02:05 PM Reply Like
  • Economic Analyst
    , contributor
    Comments (2368) | Send Message
     
    TAMPAT-

     

    "There is more to investing than just reading company balance sheets and financial metrics, one had better pay attention to govt policies, geopolitics and macroeconomics"

     

    Each to their own, but for me this is exactly the sort of comment I find useful in helping to judge which way the wind may be blowing next and in making a decision to go long on umbrellas or sunscreen or iced tea. IMO this sort of understanding can be usefully applied to any number of personal situations and to any sector or stock or instrument one may be knowledgeable in.

     

    As a followup question, I would appreciate any opinion or insight into the relative weighting, prioritization, of trends to any of the factors that you identified as significant.

     

    While I do not believe it possible to apply such mathematical formulae to useful purpose as a basis for reliable prognostication, it does I believe have value as a basis for comparison when looking at any number of possible choices in an effort to achieve the properly balanced mix that is appropriate for each individual.

     

    The better insight that is provided by exposure to a wide range of varying experiences does expand the sample size hopefully to a level that increases confidence beyond what ones narrow view based on personal experience would offer, and that includes both positive results and negative ones.

     

    In fact, I believe most folks who have participated in sports would agree that the champions learn as much if not more from the defeats as from the victories.

     

    I am a believer in practice trading, as I think it is easier to concentrate on testing whether or not a given strategy is more effective than another when there is no skin in the game so that when there is you are not likely to flinch the first time you get a little recoil when firing live rounds.

     

    .
    28 Jul 2013, 04:23 PM Reply Like
  • tampat
    , contributor
    Comments (995) | Send Message
     
    "As a followup question, I would appreciate any opinion or insight into the relative weighting, prioritization, of trends to any of the factors that you identified as significant."

     

    Econ Analyst,

     

    Thats an interesting but difficult area to quantify or use a timing methodology. There is an old saying of Don't fight the Fed. I would add 'or the govt'.
    Trying to predict what they will do can be difficult, however, they have shown an inability to do much of anything constructive due to the extreme polarization. So maybe we need to focus on what they won't do as well as what they will do. If one were able to identify and monitor what companies will be effected by a certain piece of legislation then of course that would identify companies to invest in. Interestingly, many times companies that will receive favorable legislation jump in price prior to it being passed as the information leaks out to the special interests or favored people such as company lobbyists and insiders.

     

    War is one strong historical trend. The US will use its power to try and maintain the petrodollar at all costs and war will be a mainstay. Not necessarily big wars, but the projection of US power will continue. The US is increasingly using special operations forces or smaller highly trained groups in trouble spots around the world so any companies related to that area might be looked including helicopter makers such as (UTX), (TXT), and (BA).

     

    Investments in Defense companies seem reasonably safe to me. Any time there is a scare of defense spending cutbacks that lower the price of stocks such as LMT, RTN, NOC, etc, that is a good time to pick up or add to those type of investments. Generally any talk of defense spending cutbacks are generally related to a cutback in future increases, no real cutbacks. The cutbacks made recently are among lower level staff, though I did read recently about some cutbacks at the Pentagon among senior staff but personnel cuts like those don't effect defense contractors.
    Recently more submarines were planned so look at submarine builders, that would be good for NOC and GD. There is a somewhat UTR company called Huntington Ingalls Industries (HII) that builds, overhauls and repairs ships for the US Navy and Coast Guard and it has had a good run.

     

    Another area of focus that I believe may pay off well is Drone builders so one might investigate AeroVironment (AVAV) and again, (NOC) or any companies related to that area.

     

    A third area of growth should be Homeland Security so companies such as (ASEI) and (KTOS) might be interesting as well as any other companies in this field.
    There are other companies one can find with additional research. War will be around long after we are all gone and is a profitable area.

     

    The middle east is a wild card so oil/energy companies deserve some attention also and that ties in, again, to defense companies.

     

    Other trends such as the widening of the wealthy class vs the less wealthy may lead to some instability and restrict economic growth for some time.
    Personal home security companies such as (ADT) might benefit from what I expect to be an increase in social unrest. I consider gun companies like SWHC and RGR to be at risk of govt intervention but tasers are seeing increasing purchases from law enforcement so there is (TASR).

     

    Any companies involved with preventing/controlling hacking of govt facilities might be of interest.

     

    I also like the international consumer staples companies as a conservative anchor which provide dividend income.

     

    To wrap this up, defense, homeland security and social unrest are 3 areas of interest to me.

     

    The more commonly discussed issues of unemployment, GDP, QE, interest rates, the rising debt and money supply, under-funded pensions, city bankruptcies, etc and what the govt does in these areas are all areas to monitor as well.

     

    Technology and biotechnology will have an enormous impact in the future but thats a whole different discussion.

     

    Health care is another area that should have good investment opportunities as the population continues to age but some of the unknowns of the ACA might have an unpredictable effect.

     

    At some point I believe a crash is baked in the cake but I can't put a time frame on it. One might want to consider some defensive measures against a crash but they may be stagnant for a while, or not, I just don't have a good answer to that.

     

    Timing of events is a WAG at best so I think one just needs to position themselves in areas that may benefit from these issues and events. A problem is the markets have risen pretty far, pretty fast and no one likes to buy and then see a correction.

     

    I really enjoyed reading your comments. I agree with what you said about those who participate in sports learning from defeat as well as the comments on practice trading and I like the analogy to shooting, that was good and accurate.

     

    Practice trading, often referred to as paper trading, has its merits. That being said, when your own real money is on the line emotions do interfere and cause us all to respond to our own fear and greed issues and sometimes make not so sound decisions.
    Hope this is close to what you were asking about. This subject is not easy to discuss in a short paragraph.
    28 Jul 2013, 06:53 PM Reply Like
  • Economic Analyst
    , contributor
    Comments (2368) | Send Message
     
    TAMPAT-

     

    Awesome response, much appreciated. I'll read it a few more times and see what sticks.

     

    I'm still looking for a universal model that can be used to simulate and model certain positions and play out different variables with alternate outcomes.

     

    I believe your comment strongly supports the argument that government policy is a strong driver for a wide range of possible and any model should weight their factors accordingly.

     

    The other point I would emphasize is the importance of knowing the specifics of the selected market dynamics and tailor the model accordingly, as each company will respond in a unique if not predictable manner.

     

    The primary objective in my view is to increase the confidence level in any allocation decision by better knowledge; it is unrealistic I think to expect 100% confidence, however if good data can raise it from say 50% to 60% that is an edge that can be potentially exploited.
    29 Jul 2013, 02:42 PM Reply Like
  • tampat
    , contributor
    Comments (995) | Send Message
     
    Econ Adv,

     

    If you put together a model as you described I would love to see it.

     

    It appears the key point will be interpreting govt policy and projecting it into the future. If you get that right I think its downhill from there.
    29 Jul 2013, 03:40 PM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    I am the one who has been investing for over 40 years. I do not recall TACK making that statement. My first stock purchase was HCA when I was in high school and the company had only one small hospital across from Centennial Park in Nashville. I did not have much of a stash back then. Only so much can be accumulated mowing lawns at $2 per lawn, hand clipping and sweeping included in that price and working for my Dad during the summers, eventually working my way up to $2 per hour by 1971.

     

    And, I had other investments to consider, including the purchase of my first gold coin. Back then, it was illegal to actually own gold bullion, like the Krugerrand, but it was legal to own "numismatic" gold, which meant for my purposes a common date $5 Liberty uncirculated gold piece minted in the 1880s, which I still have, that was priced fairly close to the spot price of gold.

     

    I have never achieved an annualized return of 18-20% for an extended period of time. I have done better than that annualized rate for a period, only to suffer a giveback type of period. I was hammered pretty good in 2008 to March 2009.

     

    It is possible to achieve those kind of returns, but it would be necessary to just about avoid owning much of anything during the periodic nasty swoons that take most securities way, way down in price and then to load up during the most opportune times.

     

    In my adult life as an investor, there have been 3 declines of greater than 45%. If you go down 30-50% in 2000-2001, for example, that is not easy to make up and will needless to say hamper your long term returns.

     

    If those nasty spills could be avoided almost entirely, and the investor had the nerve and the cash capacity to buy in bulk during those catastrophic declines, then a really superior return could be had even by investing in the S & P 500 and then reinvesting the dividends.

     

    Tack and I will invest in many of the same securities.

     

    I can say from personal experience in 2008-2010, with the purchases discussed in over a 1,000 blogs, that I had a large number of doubles and triples from buys made between September 2008 and through 2009 in securities like trust preferred and equity preferred securities, european hybrids, trust certificates and assorted other types of exchange traded bonds.

     

    Provided the investor feasted on those opportunities, far more than I did, the annualized returns would have been phenomenal. I previously referred to Fidelity's calculation of just how much I beat the S & P 500 during the 3 and 5 years ending in October 2011. It was not that usual to buy those types of securities in the single digits and then see them called by the issuer within the past year or two at a $25 par value. I bought one at less than $3 that never missed a dividend payment until it was called at $25; and the yield at my purchase price was over 70% per year.

     

    So I can see how it could have been done but difficult would be the operative word.
    25 Jul 2013, 10:27 PM Reply Like
  • extremebanker
    , contributor
    Comments (1680) | Send Message
     
    SG51:

     

    Did you review the paper by Mebane Faber? It offered some portfolios with pretty good returns.
    26 Jul 2013, 08:51 AM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    Extreme: I did download and review the paper "A Quantitative Approach to Tactical Asset Allocation" Are you referring to something else?

     

    The gist of what I am discussing above is the difficulty of achieving 18%-20% annualized returns even for a well informed, experienced and disciplined investor.

     

    The problem can be divided into two broad categories.

     

    The first involves what I call "error creep". The first stage of error creep is a failure to acquire relevant information before making an investment decision. This can be broken down further into two categories.

     

    (1) The investor does not use original source material to analyze a particular security (bond or stock).

     

    (2) The investor does not acquire accurate information about the big picture issues involving valuations of an asset class or macroeconomic secular forces that can drive markets up or down for long periods.

     

    That failure is made worse by accumulating a vast array of inaccurate information and forming immutable opinions based on erroneous information.

     

    There are many more stages of error creep which I discuss in the blog.

     

    Stocks, Bonds & Politics: ERROR CREEP and the INVESTING PROCESS
    http://bit.ly/TJXme2

     

    The second fundamental problem interfering with an investor's ability to achieve that 18-20% annualized return is psychological or behavioral in your terminology.

     

    Those issues involve fear and greed as well as ego and confirmation bias.

     

    The Nestle purchases that I made in March-April 2009 were made with a flawless avoidance of error creep. I acquired the relevant information and made a sound judgment about valuation.

     

    Then, I had a behavioral issue come into play that interfered with my rational decision making process. I knew that I had bought Nestle at a good price for a long term hold, but I sold the shares anyway to book a profit. That erroneous decision was due almost entirely to the fear of losing a profit.

     

    If I did not have ready access to a means to sell the security, I would still own those shares. I still own my home built in 1982 or my mint 1958 Mickey Mantle baseball card acquired for a penny that year.

     

    The ease of selling and buying exchange traded securities actually facilitates erroneous decisions based on behavioral issues and makes it difficult for seasoned, largely non-emotional investors to avoid those mistakes altogether.

     

    A minor behavioral issue for me at least was explaining the Nestle sell with what seemed to be a rational reason. I mentioned that I sold Nestle to buy the BABY B Berkshire before the 50 for 1 stock split.

     

    So, reading between the lines, I knew that selling Nestle was boneheaded but buying the BRK/B with the Nestle proceeds seemed rational until I have to admit that I could have kept the Nestle and bought the BRK/B with idle cash.

     

    Then, what did I do? I sold all of my BRK/B to harvest a gain, repeating the same behavorial mistake again!

     

    I have had behavioral mistakes going back to 1974 involving Berkshire when I failed to buy 100 of the BIG BRK/A shares at $16 back in 1974, because my Left Brain was fearful of losing some money and that fear was enhanced by a rational recognition that I did not have much to lose at the time.

     

    Still, by minimizing those error creep and behavorial issues, I have done well. And, I could have done better than 18%-20% per year by avoiding a few more such as overcoming the fear of losing money in 1974 and then avoiding the fear of losing profits and consequently holding BRK/A until today.
    26 Jul 2013, 09:38 AM Reply Like
  • extremebanker
    , contributor
    Comments (1680) | Send Message
     
    SG51: You got the paper I was talking about. You describe very well the behavioral nuances each investor must face when trying to be better than average. I guess that is the reason I like rules based portfolios as a way to manage my emotions.

     

    An interesting read is a speech by Charlie Munger at Harvard. I hope everyone enjoys and it can provide some material for future discussion.

     

    http://bit.ly/12n2vQX

     

    Probably my biggest mistake was not buying microsoft on the day it went public. I fully intended too and it just slipped through the cracks. Gates already had a good reputation at that time and I had money to invest. I even told some friends prior to the IPO that I wanted to buy some.
    26 Jul 2013, 09:47 AM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    Extreme: After exploring Mebane's rules strategy, and using a 200 day moving average starting in 1950 with the S & P 500, the investor would have avoided most of the major declines in the S & P 500 while the re-entry point would catch most of the next up move after a lag of course.

     

    As I noted in an earlier comment, avoiding most of those catastrophic declines is extremely important, and will substantially improve performance long term. If a portfolio goes down 50%, it has to rise 100% to get back to even.

     

    In my own portfolio, I was able to get back to October 2007 levels in the summer of 2009 after taking some good licks, only because I was investing in October 2008-March 2009 and then reallocated to stocks starting in March 2009 after raising significantly my cash and bond allocations in 2007 through stock allocation reductions, but I still had a significant stock position throughout 2008.

     

    The rules based SMA system will give a "false" sell signal on occasion with a minor dip below the 200 day SMA. An example would be the decline during the summer of 2011 which was a buying opportunity but a rules based 200 Day SMA would have required selling. There was a short dip using 200 day SMA in November 2012 that was meaningless.

     

    For now, I will use the 200 day SMA crossovers to pare or to add only, with a greater pare triggered by a close 5% below the 200 SMA.

     

    To keep it simple, I will not use a moving average based on the monthly closing numbers but simply the 200 day SMA drawn by Yahoo Finance using a 2 year chart of the S & P 500:

     

    http://yhoo.it/y13la5;range=2y;compare=;ind...

     

    For buying, I will not wait to buy for a crossover above the 200 day SMA, but will simply limit my buying as I did in the September 2008-March 2009, mostly to cost flow received and proceeds realized from selling and possible minor excursions into the cash stash for consumer staple buys. An investor has to recognize that buying during a catastrophic event such as in October 2008 and continuing into 2009 can produce stellar returns. Buying into a 1999 event is likely to produce the opposite result unless the investor can exit positions before the inevitable huge decline.

     

    Buying can pick up after the crossover above the SMA line without those limitations on exposure.

     

    And, I am not likely to make a 100% move out of stocks unless valuation levels, similar to 1999, are hit again. What I would do is decrease my stock allocation more than I did in 2007 with a Trigger Event in my Vix Asset Allocation Model and a greater than 5% decline in the 200 day SMA for the S & P 500.
    26 Jul 2013, 12:35 PM Reply Like
  • extremebanker
    , contributor
    Comments (1680) | Send Message
     
    SG51: I like your rules. You are correct that the 200 day will occassionally give a false signal so having a sense of where we are in the business cycle can be very beneficial. If the FED has been raising rates or threatening rate hikes I would find a move below the 200 day impending. If the market had been in the tank for quite some time I would find a move above the 200 day quite enticing for new investment. I also usually don't do all on none. I have a range and I will move within that range. Your rule about the market violating the 200 day 5% or more will reduce false signals. I have found moving averages to be beneficial.

     

    Thanks for the reply.
    26 Jul 2013, 01:41 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    extreme

     

    thank you for article
    26 Jul 2013, 08:33 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    @ Extreme

     

    I'm about 1/2 way through Munger's article. It's a lot to take in. All obvious concepts in their own right, but hard to remember to apply all at the same time... well worth keeping a list like that around. Especially with his application of them to business.
    26 Jul 2013, 08:50 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    @ SG & extreme

     

    That's very interesting stuff. Is that link to the article around here? I can't seem to spot it. Thanks :)
    26 Jul 2013, 08:54 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » "Discussions between Barclays (BCS) and regulators regarding measures the bank will take to bridge a £7B capital shortfall were still ongoing Friday evening, FT says. BCS is widely expected to unveil a series of new measures to help boost its capital levels when it reports earnings on Tuesday. One option reportedly under discussion: contingent convertible bonds ("cocos", affectionately) which automatically convert to equity or, in the case of some issues, are written down in the event certain thresholds (a preset Tier one capital ratio for instance) are breached. The bank may also shrink its balance sheet by reducing derivative and repo transactions"

     

    Another bit of good news from overseas. A shortfall? Something called "cococs"?.... You just can't make this stuff up !!
    27 Jul 2013, 06:46 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @SOUTH

     

    like I said I could be wrong, it may have been you. Trying to remember over 5k posts isn't easy...lol

     

    Just time to move along as posters come and go daily .
    25 Jul 2013, 10:48 PM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    My 90 year mother has a better memory than I do.

     

    By using the google search box in the right hand corner of my blog, I will frequently have my memory refreshed about past mistakes of one sort or another.

     

    I was thinking about buying some Nestle stock when it pulled back some in price. The ADR shares can be bought on the pink sheet exchange in the U.S.. The long term chart is what I like, a steady up move from around $7 in 1993 to a close today of $67.55, with a dip in 2008-2009-the buying opportunity for someone who did not own the stock and wanted to establish a long term position like myself:

     

    Click "max" for time:
    http://bit.ly/13hcimR

     

    I entered a search term in the google box, "NSRGY", and see that I did what I was supposed to do. I bought shares in March 2009 at $31.28 and at $33.88 in April 2009 (100 shares altogether)

     

    Then, I see that I did something not so smart. I sold the shares at near $39 to clip a profit. That is one way to shoot oneself in the foot and to keep the annualized return down over long periods.

     

    Whenever I buy something now, I will include a snapshot of the trade and discuss my prior trade. Sometimes, that makes me look stupid when I buy something back at a much higher price than a previous sell.

     

    25 Jul 2013, 11:08 PM Reply Like
  • extremebanker
    , contributor
    Comments (1680) | Send Message
     
    The inability to sit on profits is a behavioral problem for many investors. Not many are able to ignore profits to accumulate those ten and twenty baggers that Peter Lynch was so fond of. One way I try to avoid selling so much is to figure the tax consequences. If you consider the tax consequences of a sale your portfolio is reduced each time you make a sale.

     

    Taking profits has been a behavioral issue I have fought for years and years. As a result, I only have four positions that are ten baggers. Two of these are real estate related which is why I was able to hold.

     

    The first stock I purchased in 74 was Smithfield Foods. I paid 87 cents per share for 200 shares. The commission was as much as the principal. I doubled my money (big deal) and sold it. I don't want to figure what it would be worth today since it was just bought out by China. Oh well, win some lose some.
    26 Jul 2013, 08:27 AM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    extreme

     

    I my opinion, people are giving too much credit to Peter Lynch for picking stocks; the following are my reason:
    1- in the 80s, the markets came out of 15-16 years bear cycle with the Dow stuck at 1,000 all this time
    2- also interest rates reached about 20% and a nasty recession
    3- unemployment reached 10%-12%
    4- inflation reached double digit
    5- gold reached a high of $850

     

    With the economy coming out of a nasty bear market, recession, and a bull market for the Dow going from 1,000 to 14,000, it is easy to pick up winners
    26 Jul 2013, 12:41 PM Reply Like
  • extremebanker
    , contributor
    Comments (1680) | Send Message
     
    Rina:

     

    I agree that a strong bull market can make us all look brilliant. I have not read his book just a few articles. I also believe this makes a strong case for "timely indexing" since he held thousands of positions.
    26 Jul 2013, 01:49 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    extreme
    thank you for reply; what is "timely indexing" ....first time I hear it...thank you
    26 Jul 2013, 01:58 PM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    RINA: Lynch took the helm of the Magellan Fund in May 1977, which was more than five years before the long term secular bull market started, and remained until May 1990. He did not have the win at his back for five of the 13 years.

     

    It is my understanding that he produced a 29.2% annualized return which would have been substantially better than the S & P 500 performance during that time frame.

     

    I did a calculation of the annualized S & P 500 performance between 1/1/1977 and 12/31/1990, unadjusted for inflation, and came up with 13.28%.

     

    His performance was not tested by extreme market declines of the 45+% variety but only by the severe and temporary decline in October 1987.

     

    The true worth of a money manager is determined in part by their ability to navigate those catastrophic events (1974, 2000-2002, 2008-March 2009).

     

    If Lynch had gone down 50% in 2000-2002 and 2008-March 2009, then his long term record would certainly need to be taken down a few notches, but he was not managing Magellan in any of those major down cycles.

     

    I just pulled the data about his performance and tenure at the Magellan fund from wikipedia:

     

    http://bit.ly/18HtrOC

     

    When he started at Magellan, the fund had only $18 million in funds. It is easier to do well when the assets are relatively small compared to the huge behemoth Magellan would become later in his career.
    26 Jul 2013, 02:14 PM Reply Like
  • extremebanker
    , contributor
    Comments (1680) | Send Message
     
    I just made it up but to me it means picking indexes instead of stocks and most important being in the right index at the right time. It is a form of relative strength investing.

     

    I find it is more important to have your allocation correct than to be a good stock picker. I saw an illustration that went something like this.
    You have two individuals who invest in four asset classes. Individual A is a better stock and bond picker and outperforms in every class. Individual B is not as good but is good at managing allocations. The results are as follows:

     

    A B
    Domestic stocks 15% 12%
    Foreign stocks 2% 1%
    Bonds -1% -4%
    Cash .5% 0%

     

    In each case A outperformed B. But B was better at allocations.

     

    A B
    Domestic stocks 25% 40%
    Foreign stocks 25% 20%
    Bonds 25% 5%
    Cash 25% 35%

     

    Total Return 4.125 4.80

     

    B did better because he was better at allocations.

     

    Just a thought!

     

    Couldn't get the columns to line up but column 1 is A and column 2 is B.
    26 Jul 2013, 02:25 PM Reply Like
  • tampat
    , contributor
    Comments (995) | Send Message
     
    Thats a good point. Its the same for those who invested since the 2009 turnaround. Throwing darts at a dart board to pick stocks would have been successful. It easy to look smart when stocks only go up.
    26 Jul 2013, 02:33 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    extreme

     

    thank you for the illustration
    26 Jul 2013, 02:57 PM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    Extreme: Most of time asset allocation is the key to long term performance, but the asset allocation can not be divorced from real world events. The clearest example is the impact that inflation had on both stock and bond allocations from about 1966 to mid-1982. Other examples are when one of the markets hit extreme valuation levels.

     

    And asset allocation can be accomplished now with low cost ETFs covering the broad asset classes.

     

    Some of the carnage can be avoided through use of timing devices such as the SMA 200 day for the S & P 500, or just a common sense realization that a 10 year treasury bond at 2.5% is not such a good deal with inflation expectations running at over 2% per year. And even the nominal return will not be sufficient to generate the kind of income needed by most people for retirement planning purposes.

     

    When stocks are clearly overvalued and bonds are unattractive, then an increase in another allocation based on better total return prospects or just for capital preservation purposes would be appropriate. However, the investor may be making erroneous decisions about valuations and future earnings, so massive reallocations out of stocks need to be limited in my opinion to clear cases of crazy valuations.

     

    It is important to keep in mind that cash is producing close to nothing now and it would take about 139 years for an investment yielding .5% to double in value BEFORE INFLATION and taxes, so there is a huge risk for most folks with a large and long term cash allocation earning nothing. That would be for maybe 90% of American households most of whom need a lot more than they have now to retire in comfort.

     

    As I mentioned in a comment elsewhere today, almost $7 trillion is in savings accounts earning nothing:

     

    "The Fed's data on savings accounts shows almost $7 trillion is parked in that "investment" yielding nothing and losing ground to inflation everyday.

     

    Table 6
    http://1.usa.gov/KFlU2x

     

    I just checked the "Platinum" savings rate offered by BAC for a customer with less than $10,000 and that platinum rate was .05%. There is a period there before the zero. If you are a really good customer with over $250,000 in one of those platinum accounts, the rate rises to .2%.

     

    Before inflation and taxes, and assuming a tremendous rate rise to .5%, it would take about 139 years for money to double at that rate.

     

    http://bit.ly/U5wENS"
    26 Jul 2013, 03:39 PM Reply Like
  • extremebanker
    , contributor
    Comments (1680) | Send Message
     
    SG51: I agree. During 2008 I maintained an allocation to stocks between 25 to 35% which caused me to go down 12%. I more than made up that 12% in 2009. We both know it takes a 100% gain to make up a 50% loss. I try to practice Warren Buffett's first and second rules.
    26 Jul 2013, 03:51 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    @ SG

     

    You underestimate :). I can earn 1% on my money! Well on up to 100k, if I jump through enough hoops.

     

    ZIRP has made cash impossible. Bonds long term unrealistic for these rates. And lots of savers grumbling as they head into retirement.
    26 Jul 2013, 04:09 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @CURLS

     

    1% wont cut it in the PORTFOLIO CHALLANGE !!

     

    You better do you best now that you are a pro since you wanted a margin account and options allowed.

     

    Sure your not a troll?
    26 Jul 2013, 04:26 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    south

     

    Thank for clarifying my statement about Peter Lynch and I will try to verify my statement before posting; yes, even if he missed a few years of the bull market, being invested during the bear market provided more wind during the bull market; the same way as Warren Buffett stayed invested.
    Following are some stocks that I should have kept till now:
    1- (http://bit.ly/11geSKy) at $15.21 as of today, bought at about $7, decent dividend
    2- (http://bit.ly/13jbCME) at $49.11, bought at about $30, reached high of $54 recently, decent dividend
    3- (AQUNF.PK) at $6.91, bought for < $4, decent dividend

     

    If I had kept the above stocks during the markets drop, with the following rally and dividends reinvested (which I do), I'd be looking at over 100% gains
    26 Jul 2013, 08:17 PM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    Rina: Never heard of your #3. I have bought and sold MPW and Plum Creek.

     

    It has been a long time since I owned PCL. I owned RYN, a similar REIT, more recently.

     

    I see that I sold MPW at $12.25 in January, and bought 50 NLPRD at $24.9 to generate more income in the ROTH:

     

    http://bit.ly/UsWRoX

     

    I then sold the NLYPRD at $26.01 after becoming concerned about interest rate risk for a perpetual equity preferred stock:

     

    Item # 1
    http://bit.ly/119WqWV

     

    I would have been better off just keeping the MPW which I had bought at less than $10. Neither of those positions are core. I am much more likely to hold a core position for a long time.

     

    When I look back, my best results come from asset allocation decisions (buying in 1982, selling in 1999, paring stocks in 2007-raising cash + bonds, buying stocks back in March 2009-2010).

     

    My worst decisions involve harvesting profits too soon, followed closely by failing to buy a few stocks after coming really close to pulling the trigger.

     

    I am curious whether Buffett considered selling his KO position in 1998 when the price was higher than it is now. He could have sold then at $42+, more than today's close, and then bought back the shares at $19, split adjusted, in March 2009 or $20 in 2003 or 2005. I reinitiated a position in March 2009 so it paid to get out and then back into that one. It does work a lot.

     

    YF Long Term KO Chart Click "MAX"
    http://yhoo.it/18ttzRh;range=my
    26 Jul 2013, 08:51 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @TAMPAT

     

    I have used that same phrase yet no one wants to believe it. Everyone wants to think they are good at picking stocks , until the bull runs out then we hear all the bullsh....
    27 Jul 2013, 11:41 AM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    south

     

    Thank you for sharing your insights with me; are you concerned with KO that people are swinging to healthier drinks?
    27 Jul 2013, 10:32 PM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    Rina: I drink two regular sugar cokes a day and view that consumption as therapeutic. KO has a wide variety of "healthier" soft drinks including the diet and zero calorie versions, and my concerns do not involve that issue.

     

    I own what I call a maximum allocation to KO shares with about a $25 cost per share. For risk management purposes, I limit my exposure to the securities of every company. I have taken several snapshots of that position in my blog.

     

    At the current price, I am neither a buyer or a seller. I am not reinvesting the dividend.

     

    I view the stock at its current price to be tapped out. By that I mean that upside potential based on reasonably foreseeable earnings growth for the next year is minimal.

     

    So, I am making a valuation call. Unlike gold or silver, KO is a business capable of being valued using objective criteria, such as price to FCF, FCF Yield, P/E, P.E.G. and so on.

     

    KO has a highly predictable rate of E.P.S. growth, which is the case for most large well-entrenched consumer staples. E.P.S. is estimated at 2.10 in 2013 and 2.28 in 2014 or a high single digit rate of growth of 8.57%.

     

    The five year estimated P.E.G. is 2.45, and I would generally prefer buying a stock like KO nearer a 2 P.E.G. The T.T.M. P/E is 21.4 and the forward P/E is 17.82. The financial stabiity is very high.

     

    The last earnings report was slightly disappointing. Still, KO has a long history of increasing earnings and dividends. I would normally expect the dividend yield to double in 6 to 8 years. At my constant cost number, my dividend yield at the current quarterly rate of $.255 cents per share is about 4%. I reasonable prediction would be a 8% dividend yield in 7 years and 16% in 14 to 16. The rate of dividend growth will slowdown during recessions and their aftermath.

     

    Without Adjusting for Recent 2 for 1 Split (percentages are growth Y-O-Y)

     

    2013 $2.24 9.8%
    2012 $2.04 8.5%
    2011 $1.88 6.8%
    2010 $1.76 7.317%
    2009 $1.64 7.89%
    2008 $1.52 11.765%
    2007 $1.36 9.677%
    2006 $1.24 10.71%
    2005 $1.12 12%
    2004 $1.00 13.6%
    2003 $ .88 10%
    2002 $ .80 11.1%
    2001 $ .72 5.8%
    2000 $ .68 6.25%
    1999 $ .64

     

    Coca Cola Dividend Page:http://bit.ly/TDlalI

     

    I would place a reasonable valuation range of between 15 to 17 times estimated 2014 earnings for a buy now, which gives me a price range between $34.2 and $38.76.

     

    It was not KO's fault that investors priced the stock at $42 in 1998. Please note that would be 18.42 times estimated 2014 earnings and KO has been growing both its dividend and earnings since 1998. The valuation in 1998 was just indefensible and anyone owning the stock would be justified in selling it then.

     

    Whenever theses large cap relatively slow growers reach that kind of valuation, they will likely suffer a 50%+ price cut relatively soon.
    27 Jul 2013, 11:54 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    south

     

    Thank you for your insights and I will consider them when I start a position
    28 Jul 2013, 12:43 AM Reply Like
  • tampat
    , contributor
    Comments (995) | Send Message
     
    SG,

     

    That is a good analysis of KO.

     

    Are you saying that you have an expectation that large caps "will likely suffer a 50%+ price cut relatively soon"?
    28 Jul 2013, 08:08 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    @ SG & Tampat

     

    The problem is market timing. SG's point that wild overevaluation leads to crashes in a stock or the market... certainly is valid.

     

    Question becomes, -how long & how high over sensible- can an evaluation go, before you sell to avoid the inevitable?

     

    Also question becomes - are were near that in current environment? So are we at a point where that 50% is near? It's a market timing question.

     

    -------

     

    All of SG's comment of course is useful to me, as giving ideas on how to do valuations of a stock. Since to move from ETFs to stocks, I've got to get good at this.
    28 Jul 2013, 10:40 AM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    The current valuation of KO shares are only slightly outside my reasonable valuation range. If the shares moved to about $80 tomorrow, up from Friday's close of $40.64, then you would have a similar valuation as in 1998 which would inevitably cause a 50% or so price correction back to Friday's close.

     

    I doubt that anyone waiting to buy the stock will get a chance to buy it near the bottom of my valuation range. I would give that about a 1 in 20 chance over the next two years.

     

    The price decline in 2000-2002 in the S & P 500, almost 50%, was a rational adjustment in price to the indefensible valuations generated by the market's parabolic move in 1998-2000. I am saying that this kind of 50% or so adjustment will be severe and would occur relatively soon to correct asinine market valuations. So I sold in 1999.

     

    The extreme and indefensible valuations, reached in 1998-2000, impacted even the best and largest companies. For literally thousands of lesser known and less viable over the long term type companies, their valuations hit levels than indicated that the inmates were in charge of the asylum. The word crazy does not do it justice.

     

    When large cap valuations reach the levels seen in 1998-2000, a crash in market price is inevitable. Those kinds of valuations are reached in the blow off phase of a long term bull market when investors completely lose pricing discipline in a form of mass delusion and this time is different group think.

     

    KO simply reached a 40+ P/E (1998) earlier than some of the other large cap companies who hit peak prices and valuations during 1999 or early in 2000.

     

    GE hit its patently absurd 40+ P/E valuation in 2000, for example, when the price hit $58 or about 32 times estimated 2014 earnings. If someone would buy my GE now at $58, with most of my shares acquired after Lehman's failure, I would gladly give them that opportunity.

     

    This type of event in 1998-2000 and the reaction are predictable events and will happen again.

     

    As I have noted here and in the blog, the valuations reached in the blow off stage of a long term secular bull market will result first in multiple compression followed by a long period, possibly a decade or more, of channel movement as the firm increases its earnings and then the multiple will ultimately shrink to an equally absurd high single digit price. Those patterns will repeat themselves over and over again.

     

    Links to a few posts on the subject:

     

    3. Multiple Compression for Many Large Cap Stocks
    http://bit.ly/UowheR

     

    1. Large Caps For 10 Times Earnings:
    http://bit.ly/TXhOsM

     

    28 Jul 2013, 11:15 AM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » "The Fed is likely to keep the full $85B QE program in place when it meets next week, writes Jon Hilsenrath, but on the table should be whether to refine its forward guidance, particularly whether to lower the 6.5% UE rate threshold for tightening policy. At issue is the Fed's desire to calm market worries over an imminent hike in interest rates. In the running for Fed chief, Larry Summers suggests the UE threshold might be too high."

     

    Any thoughts on this??
    25 Jul 2013, 11:30 PM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3738) | Send Message
     
    He's not following their guidance very well. They've already said 6.5% is not the trigger any longer. If inflation is still below 2%, they won't raise rates...
    26 Jul 2013, 02:07 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    @ IT

     

    Jon Hilsenrath's Friday afternoon article -- explains why the market reversed course Friday afternoon.

     

    Once again, as markets were showing weakness... a "fed connected" article or interview materialized to push market back up.

     

    Weird part is the media's or commentaries in SA, are no longer observing this is happening.

     

    Question:
    For those who've been watching a while... can this propping up be counted on? My instincts are at odds with the market's moves from the props. But if a prop is going to keep appearing, I might as well bet as though it will. And just keep tight eye on, and stops set.
    26 Jul 2013, 07:24 AM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @CURLS

     

    I firmly believe that when the FED stops so does this market. No one has experience unwinding the FEDS balance sheet and I believe this will have a negative impact on the markets,

     

    Now others feel it will be short term, yet I find it funny that we seem to hang onto every word the FED says. I may be wrong but had the FED not got involved it would have been a mess for a while, companies would have gone broke, the biggest fear was banks though.

     

    But the cleansing effect would have been what our country is built on. Now we have played with the devil and I personally feel a nasty side effect that no one has a clue about will happen.

     

    My 2 cents.
    26 Jul 2013, 12:10 PM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3738) | Send Message
     
    The FOMC will stop QE when they believe the economy has the critical mass to sustain growth (considering the influence of fiscal stimulus). Their signal of choice is Inflation. A rise in core Inflation along with declining UR-3 should be suggesting the natural unemployment rate is near. In this environment the market indices will continue to flourish with all the normal bear/bull corrections...
    26 Jul 2013, 02:06 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @FREDDY

     

    Then I guess BB'S group will be around for quite some time !
    27 Jul 2013, 11:43 AM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3738) | Send Message
     
    Well, that all depends on Congress. Congress sets policy and the FOMC mitigates around their decisions. 90% of Real GDP (and employment) is determined by the scale of the Deficit. The present Budget CR suggests Q2 baseline GDP of 2.2% will be announced next week. Scheduled 2014 & 2015 cuts may require FOMC to be more accommodative ... less so if infrastructure spending accompanies Debt Ceiling negotiations.

     

    GDP outlook charts: http://bit.ly/pfbeJm
    28 Jul 2013, 02:04 AM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2727) | Send Message
     
    Which calculation of GDP are you using Freddy, the old one or the new one?
    28 Jul 2013, 02:37 PM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3738) | Send Message
     
    Doug, when Canada did this OECD overhaul in January there was no net change in the numbers albeit some quarters were raised 1.9% and some were downgraded -1.7%. So nobody knows where the American figures will settle for any particular quarter...

     

    That said, because the quarterlies are necessarily quite noisy with export and inventory adjustments and reporting period constraints, I have designed TRI to filter out that volatility to give my clients a baseline view at any point in time. Decision-making based on wide amplitude gyrations (as broad as 4%) is usually not helpful...

     

    It is my view that the American economy underwent a pause in April 2011 (due to 1..6% rising oil price headwind) and slowly climbed back (to 2.2%) over the last 26 months. This trend will continue to February (3.2%) after which the growth rate will gradually deteriorate over the next ten years ... ultimately succumbing to a multi-year Severe Recession.
    28 Jul 2013, 03:14 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2727) | Send Message
     
    Thanks Freddy. Any reason you know of why they changed the GDP caclulation? Could one throw it in the changes to the CPI and Unemployment calculations over the years to make someone or something look better (hide the truth?) or do you see other reasoning? (not being conspiracy oriented as most everyone knows the changes to CPI and Unemployment calculations. Just trying to get your understanding as to why a move was made if you have one.
    28 Jul 2013, 03:18 PM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3738) | Send Message
     
    chained $ changed to 2009 from 2005 & treatment of fixed investments & pensions harmonized

     

    see BEA summary or full pdf: http://1.usa.gov/12vzjaF
    28 Jul 2013, 03:47 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » QUESTION FROM A LURKER..

     

    Why does it seem that most markets now seem alike. Japan was down, then we are down. It seems that if the US markets have a bad day then the Asian markets follow suit. Same happens in reverse.

     

    Any reasons others can give for this?

     

    Thanks.
    26 Jul 2013, 12:05 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    IT

     

    I believe it has to do with globalization and every country is printing
    26 Jul 2013, 12:45 PM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3738) | Send Message
     
    Many stocks are cross listed on exchanges in Asia, Oz & Europe and their stock prices never stray much from one to the other. The larger ones will move the indices. International news generally moves the same sectors worldwide...
    26 Jul 2013, 02:08 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4529) | Send Message
     
    The death of Spain, the collapse of their financial banking system and the ultimate demise of all of Europe may be greatly exaggerated:

     

    http://on.wsj.com/13hVCKO
    26 Jul 2013, 12:42 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    Fear

     

    Thank you for the article; I had relatives from Italy last years and they souded like if you work and have no excessive debt things are ok...like in any country (IMO); otherwise the newsmedia exaggerates the bad economic situation in Europe for a profit (imo)....I am sure GS and other banks want make money on their CDS and shorting the euro......who knows, it makes sense to me to make Europe look bad so we look better
    26 Jul 2013, 01:13 PM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3738) | Send Message
     
    I've thought over those devious motives myself many times over the past four years (started with Dubai), but it is difficult to tie in that conspiracy theory to the most media talking heads. Rather, it appears much of cable news is basically mentally bankrupt and trouble "over there" helps them fill the void on their 24/7 mandate so they don't continue to sound like idiots on domestic issues...
    26 Jul 2013, 02:19 PM Reply Like
  • tampat
    , contributor
    Comments (995) | Send Message
     
    Seriously?
    This small bit of anecdotal information and their unemployment of 27.2% slipped a little lower and now all is well.
    Good grief.
    26 Jul 2013, 02:30 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2727) | Send Message
     
    As I have said many time before posting here with IT's blog, the death of Japan will come first.
    28 Jul 2013, 02:38 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4529) | Send Message
     
    Another view of japan may be warranted

     

    From the central bank & IMF - u decide..

     

    http://bit.ly/14pv3no

     

    http://nyti.ms/14pv3nl
    28 Jul 2013, 03:55 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2727) | Send Message
     
    Consider the source(s), lol

     

    God some magic beans for you F&G...
    28 Jul 2013, 08:35 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    Doug

     

    Can you be more specific about the source? One's the NYTimes, the other the Japan Times.

     

    It appreciated the articles since it gives me a chance to dig into the topic & assess for myself. Do you have any counter ones for me to read as well? It's all so complicated -- there are so many angles to consider when assessing this stuff.
    28 Jul 2013, 09:56 PM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    Curls: A lot of current data about Japan can be found in a recent Credit Suisse report, a firm that frequently has a less robust growth forecast than others:

     

    http://bit.ly/1aRC5qV

     

    A weaker Japanese Yen will help their exporters.

     

    Japanese economists are predicting 3% real GDP growth in the second quarter, which will be much better than our own:

     

    http://bit.ly/1aRC5qW

     

    Historical Real GDP information is available at
    http://bit.ly/1aRC2LU
    28 Jul 2013, 10:17 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2727) | Send Message
     
    Hi Curls, I should not have included the magic beans comment, but the source was not the NY Times, but the Central Bank of Japan for the one article that the NY Times was quoting. The other source was the IMF. Of course they are going to say things like that.
    28 Jul 2013, 10:21 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » OK FOLKS

     

    We will be doing the PORTFOLIO EXERCISE as Blue Skies might have a site that will work. Otherwise everyone will be responsible for their own portfolio.

     

    NOW POST HERE IF YOU ARE INTERESTED and we will then turn it over to the chapter for investing.

     

    I believe SOUTH, NOTRUB, IT, CURLS, FEAR, TAMPAT, SOUTH, BLUESKY, are the only confirmed players. So please post here over the weekend if your in. I am setting the rules in the PORFOLIO CHAPTER NOW !!
    26 Jul 2013, 12:47 PM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    I am glad that I have two chances to shine.
    26 Jul 2013, 01:13 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @SOUTH

     

    OOOPPPS...Hey do you want 2 portfolios?

     

    Anyway I also believe COINSK is in as well, am I correct? Hebba is in too !
    26 Jul 2013, 01:25 PM Reply Like
  • tampat
    , contributor
    Comments (995) | Send Message
     
    IT,

     

    While I did make a few comments about it I never said I would participate. After you get all the rules and guidelines figured out, then I'll see, but I never commit to anything without knowing the details.
    26 Jul 2013, 01:36 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @TAMPAT

     

    Sorry I included you. I posted the rules in the portfolio chapter if interested ..
    26 Jul 2013, 02:33 PM Reply Like
  • CoinsK
    , contributor
    Comments (2736) | Send Message
     
    I'm in also IT . Don't know if I will be useful as an example(other than a Bad One),and will put in a proper disclamour accordingly .
    LOL
    26 Jul 2013, 08:55 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » I should add USER is already confirmed.

     

    Hoping extremebanker, freddy, rin, and a few others join in as well.
    26 Jul 2013, 01:17 PM Reply Like
  • extremebanker
    , contributor
    Comments (1680) | Send Message
     
    IT: I am in but could you post a link to the correct chapter.
    26 Jul 2013, 02:53 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @ I FORGOT DEERCREEK IS IN AS WELL !!

     

    The correct link is always in the blog.

     

    SOUTH, You want to give us any hints what you like ? hehe
    26 Jul 2013, 03:55 PM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    IT: I will include only what I already own, so I will need to winnow the list down some by excluding a few hundred securities. I am going to go with a 10% allocation to one speculative name, a micro cap Canadian company traded on the Toronto stock exchange. I already own it and would not even consider the possibility of buying $10,000 of that stock. Since I am playing with your pretend money, and I really want that tungsten bar, spray painted gold, I may just turn into a wild and crazy guy.

     

    Are we talking about "ferro tungsten" priced at about $48 per kg. How big of a bar exactly?
    26 Jul 2013, 04:07 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @SOUTH

     

    Huge, the size of your pinkie !!
    26 Jul 2013, 08:39 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » Yup...

     

    For anyone who needs the link for the PORTFOLIO CHALLANGE

     

    http://seekingalpha.co...
    26 Jul 2013, 03:44 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » "JPMorgan (JPM -0.8%) is exploring strategic alternatives for its physical commodities business including "a sale, spin off, or strategic partnership." With pressure mounting from Washington and the public eye now focused squarely on Wall Street's role in commodities markets thanks in part to a NY Times piece published last weekend, now is probably as good a time as any to bid the business adieu. The bank "will remain fully committed to its traditional banking activities in the commodity markets."

     

    UH OH...I guess the FED doesn't need them anymore. The banks are now long on gold !!
    26 Jul 2013, 03:46 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    IT

     

    I don't know what is going on at JPM? Fire last week and now this ? ; too many coincidents for me; something is brewing...where there is smoke, there is fire!!
    27 Jul 2013, 10:42 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @RIN

     

    I think we both have the same thoughts on this!!

     

    You do know about the portfolio challenge right?
    27 Jul 2013, 10:49 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    IT
    yes I am in
    28 Jul 2013, 10:29 AM Reply Like
  • BlueSkyForever
    , contributor
    Comments (1410) | Send Message
     
    Did anyone read Chuck Carnavale's latest SA article?

     

    http://seekingalpha.co...

     

    (QCOR) went up the day he posted it (about $1) and then over $2 today. Chuck's article is a must read.

     

    Next week, the Fed speaks + unemployment data, GDP data & all kinds of market moving stuff going on every day. Let's see if we get a pullback in reaction to the Fed's news & other stuff.

     

    IT, I think I'll wait until later next week to post my stock picks. Lol that way I can see what you all are doing & profit from it!

     

    I had some stuff worked out, but now because of all the news next week may wait to pull the trigger. I'm just going to mirror what I'm doing in real life, to a point. Might put more risky picks in the fake portfolio just as an experiment.

     

    On Fridays, normally I go over each of the DOW index stocks, to see how they are doing. It's remarkable how low some of their PE's are, and how badly some stocks are doing. Imagine if Alcoa wasn't in there, or if some stocks that are blowing the roof off were. So I guess you could say the DOW is undervalued depending on your perspective. Maybe it's a good thing, DOW is high enough as it is.
    26 Jul 2013, 08:42 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @BSF

     

    Don't show your hand too early.. We start August 1st.. Using July 31st closing numbers.

     

    I know, I know, YOUR anxious and it's like Christmas. But ya gotta wait.
    26 Jul 2013, 08:59 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » Ok gold bashers. I need a laugh. So how low is gold going to go again?? 1k, $900 ?
    26 Jul 2013, 09:17 PM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    IT: I am one of those who is in the $900 per ounce camp.

     

    That prediction is irrelevant, even to me, since I am neither a buyer or a seller at the current price.

     

    Instead, I am a long term cycle player in the bullion space. I will start to buy back some of the silver sold in September 2011 when the price dips below $15. But serious buying will have to wait for a price below $12. My last silver eagle purchases were in 1995 when the price per coin from a dealer was $7.

     

    For gold, I will need a $900 or lower price to start buying back what was sold. If the price went over $2,000, I might get out of my chair again, go to the bank, pull one of my gold eagle proof sets in those pretty velvet blue containers out of the lock box, and take it across the street to a dealer here in the SUV and Republican Capital of the World, sometimes referred to as Brentwood, TN.
    26 Jul 2013, 09:46 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2727) | Send Message
     
    South, I've written on the Proof sets. FYI...

     

    I wrote this article about Proof coins in one's IRA, but it applies to Proof coins purchased outside of an IRA as well.

     

    http://bit.ly/14pfo7q
    28 Jul 2013, 02:42 PM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    Doug: I do not own gold and silver in my IRAs. Due to my financial position, I manage my IRAs with capital preservation and income generation as my primary goals. That leads me to a wide variety of income producing securities.

     

    When I bought the 4 piece gold proof sets in the the late 1980s directly from the mint, I knew that I was paying a significant premium to the spot price but my price per ounce was less than $600. I do not recall the premium amount and it was not enough to impact my preference to buy the proof over the uncirculated coins sold by dealers.

     

    I just preferred the proof coins on a purely aesthetic basis. The Walking Liberty and ST. Gaudens designs are my two favorite coin designs from the past.

     

    I sold 1 of those proof sets on 9/6/11 at $3,515 or at $1,900 per ounce (1.85 ounces). I don't think that I received much, if any premium, to the then spot price.
    28 Jul 2013, 02:58 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2727) | Send Message
     
    ok south...
    28 Jul 2013, 08:36 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @SOUTH

     

    If you are waiting to buy gold at $900 bucks I would spend that money somewhere else. It ain't going that low ! Sorry.
    26 Jul 2013, 10:10 PM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    IT:
    At the last P.M. fix before the Fed announced QE (3/18/2009), the P.M. London fix was $893.25:

     

    http://bit.ly/17mLc1B

     

    There was not a single close above $700 in 2006 or above $536 in 2005.

     

    In 1980 the price topped out at slightly over $840 before sinking to below $340 late in 1984. In 2000-2001, the price was hovering around $275.

     

    So, what is the "fair value" of an ounce of gold and how do we determine that price?

     

    26 Jul 2013, 10:24 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    south

     

    A 1 oz of gold was $35 in the 70s and during the gold bubble it reached $850 per oz and after the economy was fixed by Volcker, gold started going down and in the 90s was around $250 per oz; so, the way I calculate fair value is 250/35=7.14 or 714% ....that's how gold keeps its value after adjusting for inflation and what Volcker did
    27 Jul 2013, 10:57 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @SOUTH

     

    Ain't happening !! lol

     

    This isn't 2009 ...
    26 Jul 2013, 10:28 PM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    IT: And the fair value of gold is $______ per ounce, determined by using the following objective criteria for valuing an asset: (1)___________; (2) _________; and (3)____________. I can draw more blanks if you need them.

     

    26 Jul 2013, 10:53 PM Reply Like
  • tampat
    , contributor
    Comments (995) | Send Message
     
    Gold will come back when the SHTF, which it will.
    Hard to time that event which could occur suddenly.
    27 Jul 2013, 06:46 AM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @TAMPAT

     

    Funny, I never thought gold really left. It is still over $1300 per ounce. Way higher then anyone would have thought 10 years ago.

     

    If they did they would own it by now. I do !!
    27 Jul 2013, 09:41 AM Reply Like
  • tampat
    , contributor
    Comments (995) | Send Message
     
    IT,

     

    I began buying gold in 1999 and never thought it would get to $1000, so I'm ok with the current price.
    27 Jul 2013, 01:10 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @SOUTH

     

    You drew a big one when you said $900 bucks! lol

     

    You better start closing down that list to 10 investments ! Clock is ticking. I have my portfolio locked and loaded .
    26 Jul 2013, 10:56 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    IT/All

     

    In the 70s gold corrected by 50% before it reached $850; so if we use the 2011 high of $1900+, a 50% cut would make it $950....I base my decisions on what happened before; will the West CBs let gold get this low and have the East buy it this low? I hope not
    27 Jul 2013, 11:13 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @RIN

     

    If it does start dropping that low then the miners will shut down, supply will start to diminish ( as i will back up a brinks truck at that price) and sell as it goes higher:)
    27 Jul 2013, 11:19 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    IT

     

    Plus, like Jim Rogers recently said, gold has a bull run for 12 years in a row, a first for a commodity; I own gold but with market conditions like this, I am not going to argue with the market and people
    28 Jul 2013, 10:35 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    @ SG

     

    Reading your assessment, I'd want to add for inflation & perceived inflation to the $893. So I'd go with the $1050 that's been mentioned several times on here. Or even $1100. Some of that is a gut sense that people are used to higher prices now, plus used to adding in for shipping. So price will be up from the $900.

     

    Particularly with so many getting in over & way over $900, it'd bounce with re-entries at a higher price than the past. Hum, maybe even $1150. Round numbers tend to do the triggering & are good enough for estimating.

     

    What do you think?
    26 Jul 2013, 10:58 PM Reply Like
  • CoinsK
    , contributor
    Comments (2736) | Send Message
     
    What will happen to PAPER if and when the "FED" announces they are RAISING interest rates. They haven't announced that in a long time have they? Paper will be the 1st thing that gets hit won't it ?
    28 Jul 2013, 08:04 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    @ CoinsK

     

    SG & I were both looking at how to price the bottom area for gold.

     

    I was using his historic info, and adding in my perceptions. (As he then adds below, my adjustments were based on psych of investing. Then being SG, he gave me tons of good resources on that topic :). )

     

    So how are you tieing paper into this?

     

    Obviously if Fed finally raises rates, it will effect many things. They've said they won't till at least 2015, and / or particular requirements. I figure the macro environment will determine a lot at that point, including whether there's panic move into gold. So I can't judge till closer to that time.
    28 Jul 2013, 10:47 AM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    Curls: Below $900 is when I will write a check. That would easily be the highest price that I have ever paid for an ounce by about $300 per ounce. If you go back to the average price in 2007, and adjust for inflation, you would not come close to $900.

     

    As to some comments about how behavioral issues impact investment decisions, perhaps the seminal book was written by Robert Shiller and published at the height of the Nasdaq madness around March 2000. I read the book as soon as it was available. His behavorial approach to investment decisions is far more descriptive of real world conditions than the creature known as the "rational man" that forms the basis of what passes for economic thought.

     

    Irrational Exuberance: Robert J. Shiller Amazon.com: Books
    http://amzn.to/1bXrOfQ

     

    Another book on that topic is "Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich"
    http://amzn.to/1bXrQ7D

     

    I am now in my 44th year studying the impact of various emotions on investment decisions using myself as a test subject.

     

    One of the few worthy economists in my estimation is Herman Minksy, known for the "Minsky Moment"

     

    http://nyr.kr/1bXrOfR

     

    http://bit.ly/1bXrQ7H
    26 Jul 2013, 11:24 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @SOUTH

     

    Hint...pay in cash...sshhhh....
    26 Jul 2013, 11:35 PM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    IT: As soon as I woke up this morning, I wanted to see whether you answered my pop quiz above, the one where you are supposed to fill in the blanks.

     

    I was thinking about using one of my Mickey Mantle baseball cards to buy an ounce.
    27 Jul 2013, 07:26 AM Reply Like
  • tampat
    , contributor
    Comments (995) | Send Message
     
    I've still got my 1956 Mickey Mantle card...
    ... one of many that I used to put between the spokes of my bicycle tires.
    27 Jul 2013, 08:18 AM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    IT: I may be able to use of my Willie Mays cards in the event the prediction made by Yoni Jacobs, author of "Gold Bubble: Profiting From Gold’s Impending Collapse", is prescient with his $700 prediction, discussed in Brad's Zigler's SA article:

     

    http://seekingalpha.co...
    27 Jul 2013, 08:19 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    @ SG

     

    Ah, a new reading list for me. You're basing price on past personal experience with Gold price. I'm basing it off no past contact with gold, then seeing the highs & having a "new adjusted sense." This stuff too must be part of the psych factors in the books. (I'm not a gold-bug at all, and not enamored of the high prices at all, so those aren't factors.)

     

    I'll have to check out the article & see how it plays this out.

     

    Now that I've tried to guess for myself & seen your history info & points, I'd be interesting to see what happens. Good way to learn & take lessons for myself as it unfolds...
    27 Jul 2013, 09:30 AM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @SOUTH

     

    Do you buy bridges as well?
    27 Jul 2013, 09:42 AM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @TAMPAT

     

    I always loved that ticking sound !!
    27 Jul 2013, 09:44 AM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » Seriously $700 ? That's just as foolish as the articles calling for a 20k Dow as well.
    27 Jul 2013, 09:46 AM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    Tampat:

     

    My 1958 Mantle card is near mint, total cost $.01.

     

    The current Ebay bid for a graded PSA 6 is $545 and it will go higher:

     

    http://bit.ly/13cseKI

     

    Mine is a PSA 8.

     

    I have several Mantle cards from 1959-1963 that are not mint but I could sell the bunch and buy a few of those $700 per ounce gold eagles down the road.

     

    27 Jul 2013, 10:42 AM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @SOUTH

     

    The only $700 eagles you will be able to buy will either be silver ones or those nice Chinese tungsten ones sold on the corners of NYC... LOL
    27 Jul 2013, 10:48 AM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    IT: I have a quiz for all of the gold bugs. You may have not have seen it yet.

     

    And the fair market value of gold is _______; determined by using the following objective criteria for valuing an asset (1)_________; (2)__________; (3)___________; and (4)____________.

     

    You will need to explain your bridge remark below. I have not bought a bridge, though I would buy one in downtown Nashville at the right price and provided I could charge a toll for crossing. If folks did not like that toll, they could swim the Cumberland. Some might not make it to work, but hey Sa La Vie.

     

    Us southern boys are a little slow. It is not out fault. The heat down here fries your brain cells and causes us to talk slow and omit most syllables, just to avoid taking into too much hot air at once.

     

    Yankees do not have that "hot air" problem.

     

    In fact, we need a handicap in this challenge of yours. I think that everyone born and raised in the south needs an extra $20,000 and at least 5 mulligans. Sometimes, I have thought about calling Fidelity and asking for a mulligan due to my handicap. I am sure that they would understand.

     

    As to your rules in the now Chinese tungsten bar contest, I want to buy on foreign exchanges with USDs.

     

    Can I use the conversion value of the USD into the relevant foreign currency on the day of purchase?
    27 Jul 2013, 11:08 AM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @SOUTH

     

    That pop quiz seem to be missing a big piece. BB'S INVOLVEMENT in the markets. That's the trump card... If he sneezes the markets start to react.

     

    That to me is scary ! Not a normal market by any means..

     

    But I have ALL my Bond money waiting to buy stocks, yup I do !!
    27 Jul 2013, 11:46 AM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @SOUTH

     

    Yeah, never mind . That bridge joke is for us Northerners.. How about I try this one...Ever taken to the cleaners???
    27 Jul 2013, 11:48 AM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    IT: Being the frugal sort, I only buy clothes that look great coming out of the dryer, no ironing needed, so there is no need to take anything to the cleaners.

     

    As to the comments about BB and the Federal Reserve here at SA, they fly way over my head.

     

    The FED will taper QE first and then end it most likely by the 2014 second quarter. ZIRP will continue well into 2015 unless inflation becomes problematic.

     

    I did spend a moment adjusting the price of gold by CPI.

     

    I understand the argument that there was no free market gold price when the governments were fixing the price and individuals in the U.S. could not buy bullion.

     

    Nixon ended the convertibility of the USD into gold with Executive Order 11615 issued 8/15/1971:

     

    http://bit.ly/11lX8PJ

     

    FDR's Executive Order prohibiting ownership of gold bullion was repealed by an act of Congress, Public Law 93-373 that became effective on 12/31/1974.

     

    So, I took the spot price of gold on 1/1/1975 which was $175.

     

    I then inserted that number in the BLS inflation calculator, scrolled to 1975, and then hit calculate:

     

    Answer: $759.54

     

    http://1.usa.gov/tj5h8X

     

    27 Jul 2013, 12:39 PM Reply Like
  • tampat
    , contributor
    Comments (995) | Send Message
     
    My collection ranges from the mid 1950's to the early'70's but most of them are from the early mid '60's. I used money from my paper route to buy them. Few of mine are mint, years ago I investigated the value and I think the most valuable one I have is a rookie Curt Flood but I havent paid any attention to them for years.
    Most of them were used for that cool clicking sound in bike wheels.
    27 Jul 2013, 01:15 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » GUYS

     

    Lost mine flipping cards in the Bronx. Then having my mom clean out the attic one day and I guess say to herself "no one wants these old cards I guess". WITHOUT asking her 3 sons. On top of that I had an old stamp collection she donated to charity !

     

    I had at least 4 shoe boxes full of cards. (gonna go throw up)
    27 Jul 2013, 01:44 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2727) | Send Message
     
    southgent,

     

    You don't need to do all those calculations with a flawed CPI.

     

    A 1964 Washington quarter could buy you a gallon of gas then. The silver content in that same quarter today, exchanged for the scrip of the day, could buy you close to a gallon of gas.

     

    Currencies are a medium of exchange and should maintain their purchasing power. Silver has done well with it.

     

    The difference is, we now have almost $17 trillion of current debt to contend with and unfunded entitlement obligations that can't be funded, especially if interest rates move higher. We also have Bernanke fighting deflation where his attempts to inflate to 2% (no one gave the government or quasi government entity this right to begin with) are failing because of the continued contraction.

     

    Meanwhile world credit has grown from $80 trillion to $360 trillion.

     

    Something's gotta give. It will begin in Japan, spread to Europe, and eventually here.

     

    BTW, what can a 1965 Washington quarter get you today?

     

    27 Jul 2013, 08:07 PM Reply Like
  • CoinsK
    , contributor
    Comments (2736) | Send Message
     
    If the "FED" raises the interest rates then the baseball cards might be the only "Paper" worth keeping. LOL
    28 Jul 2013, 08:07 AM Reply Like
  • CoinsK
    , contributor
    Comments (2736) | Send Message
     
    Sell stocks and keep Mickey ! I had a PSA #9 Michael Jordan Rookie and sold it on Ebay for over a $1000.00 years ago. I bought 3 oz of Gold with it. No one would pay that for it now,and Ebay would take abouy 12% in fees . Today it would maybe buy a 1/2 oz. of Gold.
    28 Jul 2013, 08:10 AM Reply Like
  • CoinsK
    , contributor
    Comments (2736) | Send Message
     
    Sorry can't ply I sell to Gold bugs but I are NOT one. :)
    28 Jul 2013, 08:21 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4529) | Send Message
     
    South,
    U very well could have that opportunity to buy Gold under 1,000, Then it maybe quite a long wait to see any appreciation.. I realize u have a LT view of your investments, so that shouldn't be an issue..

     

    Any rallies from here will be met with selling pressure , as you have often stated, parabolic moves usually end badly , they tend to retrace a very large percentage of that move, gold is not immune to that phenomenon.
    27 Jul 2013, 09:41 AM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @FEAR

     

    We shall see who is right about gold. You shorted it, how does that look so far?

     

    That 7% blip was a correction as well? We really recovered quickly from that one huh ?

     

    "parabolic moves usually end badly".....I see you added the word usually for a reason I guess.
    27 Jul 2013, 10:23 AM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2727) | Send Message
     
    F&G,

     

    Is the debt at almost $17 trillion in 42 years a parabolic move? How does it end? Badly? Can it be retraced? How?
    27 Jul 2013, 11:19 AM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @DOUG

     

    Great question.. Looking to see where this goes.
    27 Jul 2013, 11:49 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4529) | Send Message
     
    IT & Doug,

     

    Either of u buying\gold here ? It's more of the same "the crisis is coming"

     

    Oh i know " i have enough now , its a hedge." . I don't need anymore -- a sitcom for sure

     

    IT : I'll rephrase for you ... Parabolic moves ALWAYS end badly

     

    Anyone take South up on his gold valuation model quiz.. ?

     

    Doug , you ask How? u tell me, u seem to have all the answers

     

    I'm waiting to see how i should be investing now ?

     

    27 Jul 2013, 12:03 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4529) | Send Message
     
    IT,
    u can track the gold short position here

     

    http://seekingalpha.co...

     

    Look forward to track your gold purchases here as well !
    Doug you are invited also..
    27 Jul 2013, 12:09 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @FEAR

     

    let me answer you this way. I was smart enough to buy my gold over 6 years ago, and I am not buying ANY stocks on what you called a correction that lasted a few days.

     

    Really, was that a correction in your eyes?

     

    Now did you advise your clients to buy gold 6 years ago?

     

    Let's not hear that same line that we missed out on a great opportunity over the last 4 years because then I have to add you missed out on one over the last decade with gold..

     

    Or did you have the knowledge to tell ALL your investors to sell prior to 2008??

     

    Answering Doug's question with a question isn't an answer either...Now that's the sitcom !!
    27 Jul 2013, 12:14 PM Reply Like
  • tampat
    , contributor
    Comments (995) | Send Message
     
    Doug,

     

    Did you say parabolic?
    Here is parabolic attached to an article people may want to give some thought to:

     

    "Exponential Money in a Finite World"

     

    http://bit.ly/1aP3Dgx
    27 Jul 2013, 01:33 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @FEAR

     

    ok, my breakeven on gold is around $900 bucks.. You can track it now!

     

    My silver is at $19 bucks for ASE'S...

     

    Just for the record some accumulators have no interest in selling , but I really don't need to go into that here. Stackers know what I mean.

     

    I am content right now with what I have, just as I am sure you have stocks your content with. I believe in a % allocated to the physical metals.

     

    So we can now play !!
    27 Jul 2013, 01:47 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2727) | Send Message
     
    F&G, I posted my article on gold here and my present thoughts for all to see. Perhaps you missed it. I called a short term top and a possible tests of the lows and it was pretty timely, thank you. I then posted I played DUST a couple times for quick profits (could have had more, but am trying to write a book for those that are not your clients because obviously they are doing just fine).

     

    How come you won't answer my questions?
    27 Jul 2013, 02:31 PM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2727) | Send Message
     
    Tampat, thanks....thought you would enjoy Martenson's speech here; http://bit.ly/13cOhRv
    27 Jul 2013, 02:35 PM Reply Like
  • CoinsK
    , contributor
    Comments (2736) | Send Message
     
    F& G ,Will you be shorting Gold anytime soon ?
    28 Jul 2013, 08:28 AM Reply Like
  • CoinsK
    , contributor
    Comments (2736) | Send Message
     
    F& G
    I buy Gold regardless of price .I buy it at a discount. Dental Gold ,Jewelry etc. Then I sell it when it spikes. A good deal if you can get it. BTW,why don't you rag on gas and oil as well once in a while?Because at least with Gold it's money, and a person can store their savings with it. After all that's what made America great,SAVING money. (TIC)
    28 Jul 2013, 08:31 AM Reply Like
  • CoinsK
    , contributor
    Comments (2736) | Send Message
     
    Doug, the point is trading is trading whether it's paper or electronics or whatever. and F& G knows it. It's fundamental to all of us here. For someone to offer some erroneous premise to someone else because they are in Gold as opposed to wheat(or whatever), is not a genuine argument in my opinion. The one thing that I like most about precious metals as far as trading in it,is that I can save what I want for later , because it is money.If someone continually doesn't get that,then no explanation will suffice for that person.
    28 Jul 2013, 08:50 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    @ CoinsK

     

    Can I just add that Fear's posting have mostly not been about gold? Nor about shorting. He's been mostly here, giving comments on stocks & macro.

     

    There's no challenge by him on gold. Some folks prefer stocks over gold. Others the other way, such as Doug.

     

    For a while on here, each posted on what they preferred. Not sure how it's become a challenge between gold & stocks -- other than RichOnSilver kept trying to make it so! It'd be so nice, if the challenges leftover from punchier commenters (such as ROS making this a challenge) started dissipating.

     

    So back to CoinsK - it sounds like you've done well with gold! Anything you can add for those of us who don't or haven't invested in gold yet from your experiences with it?
    28 Jul 2013, 10:58 AM Reply Like
  • tampat
    , contributor
    Comments (995) | Send Message
     
    curls,

     

    I think you made a good point, it shouldn't be a challenge between stocks and gold, even SG owns gold and silver. I think your comment about Doug may not be right, he hasn't advised people to invest only in gold, just a small % of what they have.

     

    Somehow its get twisted into an either/or debate but there is room for both. I am not even close to being 'all in' gold and silver I just think there is a place for it and it will pay off, others only want stocks and bonds. Its a preference thing.
    28 Jul 2013, 11:17 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4529) | Send Message
     
    Coins,
    The "short" trade is here from July 22

     

    http://seekingalpha.co...
    28 Jul 2013, 12:34 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4529) | Send Message
     
    Coins ,

     

    I don't rag on gas & oil , because i see a "value" there.
    28 Jul 2013, 12:35 PM Reply Like
  • CoinsK
    , contributor
    Comments (2736) | Send Message
     
    Thanks F& G .I like to short silver when it goes extremely high with (ZSL) .I can buy all the physical I want and use the Proshares Ultrashort as a hedge.
    The thing is, and to ....... Curls ......as well, the thing is there are many opportunities for trading ,I just found precious metals as a commodity to be the easiest to understand for me.And since it's went down this year it seems to give bashers of Gold & Silver a royal opportunity to challenge everyone who has some .It's NOT a zero sum game ,some of us have found ways to make a profit in all types of markets ,Bear or Bull. I hope that each of us does well and can share some of the reasons for their success. I don't think Doug has to do bad for F&G to do well. And vice versa. It does seem to become a spitting contest and people take offense to other's philosophy and opinions. I will be in stocks ,mutual funds,and precious metals for the forseeable future. There now , , everyone can be offended ,LOL
    I will say my savings are not in CD accounts at a bank. I also buy extra cans of soup once in a while. :)
    28 Jul 2013, 01:50 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    @ CoinsK

     

    Thanks for your post!

     

    "some of us have found ways to make a profit in all types of markets ,Bear or Bull. "

     

    So please... do tell! Also with your timing on stocks (getting in 2009 for the bull), you may have ideas to share...

     

    As for soup - sounded good, till I just threw out a bunch of food because of mice. Now I have to decide how to clean the dropping from among my soup cans. I'm soooo grossed out. Meanwhile, if Tomcat company ever goes public, I'm buying.... their products are great. Six mice moved to "new homes" & counting. For Haveaheart (whoever sells that), it's the first product challenge in years.

     

    The funniest was a mice ate through a pouched liquid food. I can just picture the expression on his face when it came out like a river onto him.
    28 Jul 2013, 02:03 PM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    Coins: Gold and silver prices can go up with stocks. The gold bull market started around January 2002 when the price was near $280 and was trading near $380 in May 2004.

     

    Most of the cyclical move up in stocks between 2003 to October 2007 was between 2004 to October 2007.

     

    By October 2007, the stock market's top before the SHTF, gold had risen to $750-$800 so that is about a double from the May 2004 price

     

    http://bit.ly/14pemIP

     

    The S & P 500 closed at 1,107.3 on May 1, 2004:

     

    http://yhoo.it/14pemZ2

     

    The close at the highest point in October 2007 was 1,565.15 or about a 41.34% gain.

     

    So both gold and stocks rose during the May 2004 to October 2007 period by significant percentage amounts, which does show that those two asset classes can rise at the same time, what is known as positive correlation.

     

    A similar positive correlation existed most of the time, not always, between March 2009 to September 2011.

     

    Many people will not look at history before forming opinions, as if the world started with recent events.

     

    There can be also periods of negative correlation, where one asset class goes up while another goes down, and an example would be gold going mostly up and stocks going down or sideways (1970-1980) or stocks going up and gold down (September 2011-July 2013).

     

    For investors who are glued into asset allocation correlations while managing our portfolio, gold would be an asset to own, in various quantities depending on the investor, because of its negative correlation characteristics to other asset classes for extended periods. During the 1970s, it would have been one of the few asset classes that provided positive real rates of return, with the other major one being Japanese stocks.

     

    During the U.S. stock bear market between 1966-1982, the Nikkei 225 started 1966 at 1430.13 and closed at 7,681.84 on 12/31/1981.

     

    http://bit.ly/13POiqk

     

    I have discussed this type of issue many times in my blog and in comments here at SA. An example of a SA comment would be to this article:

     

    http://bit.ly/12fpA7l

     

    And, as with any asset class, there is a time to buy and to sell. Was I wrong in selling gold and silver on 9/6/11?
    28 Jul 2013, 02:37 PM Reply Like
  • CoinsK
    , contributor
    Comments (2736) | Send Message
     
    SG ,tou know what I told you about selling Gold @ $1900, and Silver at 26 X face (About $40 an Oz) You did REAL good. The point I would like for you great stock investors to understand is that I do that for a living. And when you do that well try to imagine me doing that well or maybe a little better. So I can't get on board of the " Precious metals is bad" Train . And % wise I have about a 3rd of my retirement money in stocks. I hope to sell more of that and pay for more of my real estate holdings. Iown my shop and a nice lot with a springfed creek with no liens on either. My home which appraises at $225 K is 1/2 paid for. Another all time high in Stocks after the next crash and it will be paid in full hopefully between Stocks and Gold sells .That's my strategy. And my Gold & Silver holdings are my equivalent of CASH savings. But like I told Curls earlier.I don't put money in CD's for my savings,it's paper that is a non-performing asset. So YES is the short answer for you selling SG. I'm glad for you.
    28 Jul 2013, 06:59 PM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    CoinsK: The Fed's Jihad Against the Saving Class has cost me plenty since I always maintain a high cash allocation as part of my dynamic asset allocation, as well as a safety cushion and pacifier for the Old Geezer, and that sallocation earns zero now.

     

    I did allow all of my bank CDs and short term treasury securities run off and have not bought one since 2008. Why bother? At .5%, it takes about 139 years for money to double before inflation and taxes. I do not have that long to see a $1,000 grow into $2,000 before taxes and inflation.

     

    I have an online savings account and started to use the proceeds from those maturing CDs to buy dividend paying stocks. When rates return to normal levels, and I can buy a 6 month CD for 4%, I will return that money to CDs, but that is part of my "safe" pile.

     

    Hopefully, and it does not really matter to me one way or the other, I will plow the proceeds from those sales back into silver eagles at the right price. I can wait for my price. If I do not get it, then I still own gold and silver and can sell more later in the event investors flock to gold and silver again driving up the price to new all time highs.

     

    If someone would buy my GE stock at $40 tomorrow, they could have all of it too. Just about every type of asset has a price where the investor needs to sell or to buy.
    28 Jul 2013, 08:26 PM Reply Like
  • CoinsK
    , contributor
    Comments (2736) | Send Message
     
    SG ,We are not really very different in our strategy. I don't have the ability to write as well,but I compensate with other skills like humor .
    28 Jul 2013, 08:50 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » For all those thinking were hitting on all cylinders !!

     

    " Welcome to the sick-onomy: 69% of the jobs created in Q2 came from the three lowest paying sectors, and the majority appear to have been part-time. With inflation low, U.S. families are beginning, on average, to scratch their way back - but not in the sectors where most of the jobs are being created. Federal policies attempting to cure inequality are exacerbating it, according to a WSJ editorial."

     

    Yup, sounds like a healthy economy to me !!
    27 Jul 2013, 10:22 AM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » Now I am sure those families just crawling back to being able to pay their bills are chomping at the bit to re enter the stock market,,

     

    (sarcasm off )
    27 Jul 2013, 10:57 AM Reply Like
  • Windwood Trader
    , contributor
    Comments (2442) | Send Message
     
    Re: PMs

     

    Gold and Silver have been pushed aside by Mr. Market for the last six months or so. The market that will not die continues in spite of dozens of metrics that say this critter oughtta be horizontal. Big backing from Uncle Ben will have that effect, but for how much longer?

     

    Benny has insinuated that maybe, just maybe in the far, far future the Fed will be considering to give thought to the possibility that it is possible that QEIII may start to taper down. Any stronger comment would devastate the Super Bull. A like comment sure gave Mr. Market an uppercut and a followup right cross that shocked everyone a few weeks back.

     

    So when is this going to happen? Beats me. Will it happen- You can bet your bippy it will.

     

    Inflation is now being noticed as a for-real event and those on fixed incomes- or about 30% of the population are howling. The fiat US dollar currency currently being used has been shunned by the Chinese since early this year. After 20 years of enjoying the top dog reserve currency status the Chinese are not thrilled with holding greenbacks with their diminishing value nor the sovereign debt instruments denominated in dollars either. They are using their own currency now, the yuan. Other countries will follow suit, sooner rather than later. Just about everything the US buys is increasing in cost if purchased overseas. US treasuries currently don't even keep up with inflation let alone provide a return. There is a good chance the world's reserve currency will no longer be the dollar in the not to distant future.

     

    People holding bonds, both treasury, non-profit (especially after Detroit) and corporate are looking to find a more reliable place to put their savings and investments.

     

    One obvious alternative may be precious metals. PMs for short. The demand for Gold has reached a level in India that laws have emerged making it illegal to import Gold. So many rupees were leaving the country that the currency value was diminishing rapidly. Obviously a thriving black market is in place. In China and in many other southeast Asia countries Gold is being purchased on the black markets as well where prices are 40% higher than posted spot prices due to the lack of metal on traditional markets. Gold and Silver mines have once again begun to move back up after their six month swan song.

     

    Silver has found strong support in the $20 area and its industrial use in a recovering economy will increase demand along with demand increase as a result of inflation. Germany and Argentina have recovered all of their Gold that was stored in COMEX vaults and brought it home. Other countries are quietly doing the same.

     

    A question was raised recently as to what would happen if every entity that stores its Gold with COMEX called for it. Would there be enough to cover? Probably not as Gold is "borrowed" commonly to back credit needs by others.

     

    Gold dropped down to a $1200 support level and has moved up to $1334 over the last several weeks. The cost to produce Gold is somewhere in the $1330 area depending on the mining operation. Many mines have shut down unable to produce at the lower levels, further crimping supply while demand increases.

     

    I believe that Gold- as the currency backer for a significant number of countries- outside the United States, of course will continue to rise. The increase in price will be the inverse of the US inflation increase in part. The fed can print only so much fiat money before the public in general will be unwilling to hold dollar backed instruments. I personally have made significant investment recently in physical metal and plan to continue to do so. Since the manipulators that drove the price down are probably buying at the lows and will drive the prices back up as well.

     

    Good luck in your investments!

     

    Windwood Trader
    27 Jul 2013, 11:13 AM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @WIND

     

    To support your argument I have posted a few times that reports now show that the TBTF banks are net long on gold, having covered their shorts.

     

    Some on this blog just seem to think that the market will rise forever, some do expect a pullback, but consider it a buying opportunity. I personally do not as I expect the markets , once BB stops his games, to stay down for quite a while.

     

    Meanwhile if people have no exposure to the metals they obviously don't listen to 99% of financial advisors telling them to do so . Thanks for the comments as I am sure you read a few things that concerned you.
    27 Jul 2013, 11:27 AM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    wind

     

    I thought Germany has to wait 7 years for its old?
    27 Jul 2013, 11:42 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @RIN

     

    Yes, they have to. Wind misspoke ...
    27 Jul 2013, 11:46 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    This assessment is both bull, but with bear elements incorporated. It struck me as good summary & prediction of near & slightly farther out:

     

    http://bit.ly/11lZzBN

     

    The site that article was guess-linked from, had a good summary of the sectors & market moves this last week:
    http://bit.ly/11lZxtG#

     

    @ IT
    After last two QE endings, there was a downturn, but then things were recovering. Just slower than Fed desired so they started up QE again. Any reason you think this time after a downturn (which is a supportable point), things won't level off & recover for a while? (My personal concern is after a while, however long that is, then the economy will start to pay... and down will come again.)
    27 Jul 2013, 12:59 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » CURLS

     

    I believe in my soul as soon as BB is done with his damage were in for a big mess. No one seems to calculate the debt portion that we are either going to start paying for or our kids will.

     

    We have seen trial runs where tampering ( I mean tapering ) has been whispered then a selloff, followed by damage control. Right now it seems many can't find anything they want to buy.

     

    Why is that if were in such a great bull run? Almost everything should have an upside, but does it?

     

    I just don't feel comfortable with outside economics that most seem to just forget about. It does eventually have an impact on corps. bottom lines. But the POTUS has a great way to distract the public and media away doesn't he.

     

    Read my post about those great jobs created in the 2nd quarter as most of society will never even hear about that !
    27 Jul 2013, 01:57 PM Reply Like
  • tampat
    , contributor
    Comments (995) | Send Message
     
    IT,

     

    Not sure about that. Yellen seems to be the #1 choice at this point to succeed the Benster and she is maybe more free money friendly than Benny.

     

    I would guess Obama does not want any disasters on his watch and will pull out all the stops to prevent such.

     

    But then, another theory I have seen, take it with a grain of salt, is an engineered collapse by Obama and friends to consolidate power.

     

    And behind door #3, how about the Repubs do whatever they can to create a monster of a mess in the 2015 time frame so as to prevent another Dem from getting elected. Put things in shambles like they were when Bush was leaving office which killed any hopes of a Repub getting elected on '08.

     

    Ok, I need to go get some more aluminum for my hat, wish that Goldman Sachs wasn't manipulating it so much.
    No wait, I forgot, the markets aren't manipulated.
    27 Jul 2013, 02:24 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @PAWS

     

    Larry Sommers is getting some publicity I hear. But so is Abbot and Costello !!

     

    Oh, that's right they are in office right now !!

     

    (sometimes I crack myself up).

     

    So seriously if Yellen gets the nod what do you expect will happen being more free money friendly?
    27 Jul 2013, 04:15 PM Reply Like
  • tampat
    , contributor
    Comments (995) | Send Message
     
    Ben on steroids, or just more of the same ole.
    27 Jul 2013, 06:13 PM Reply Like
  • CoinsK
    , contributor
    Comments (2736) | Send Message
     
    Larry Sommers is a disaster looking for a place to happen. Remember when he was in charge of Harvard anyone?
    28 Jul 2013, 07:05 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    @ IT

     

    "eventually have an impact"

     

    Quite a few hear are saying that. Your view seems to expect it sooner. While by contrast many are playing along with the ride for now. As I described, I'm expecting a pullback when tapering starts then okay for a bit... before any impact. A delay before the impact. You seem to expect a delay too? But are playing it as though the impact will be very soon. ...just asking of course. Each to his own comfort zone & I know you're scenario is that you can't afford to lose principle...

     

    Good point that the bull is tired at the moment, much harder to find good entry points (from what everyone says.)
    27 Jul 2013, 02:05 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @CURLS

     

    My fear is that WHEN that pullback happens it might start in ASIA before our markets even open, That was a huge concern in 2008 , which was in that movie I said to watch.

     

    Now how will investors feel if the markets open and you have very little buyers. You want to sell but you can't. Sorta like those Flash Crashes I pointed out once.

     

    Financially I can't afford a huge hit, nor do I have decades left to make it back. So I am relatively cautious right now. Plus I will add a very good friend of mine who does statistics and investing for a living was compelled to say we have a huge correction coming. Hence he is in mostly dry powder now.

     

    I trust his judgment more than anyone's as he has been spot on many times over the last 20 years. He actually called the 2008 crash ! Say's this one will be worse.. Told me to start buying gold 15 years ago although I did not start until later like an idiot. He got out of the markets a year ago. His calculations aren't just numbers but geopolitical events as well. Very complicated and I never even ask him to explain it as I am sure I just won't grasp it anyway.

     

    But what do I know, I will be ridiculed for this. However I am not saying when only it will. Once it does it will be too late to do anything about it.
    27 Jul 2013, 02:15 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    @ IT

     

    Interesting point about the pre-market sudden drops. That is how things work these days. Definitely something to factor in as one plans.

     

    It's why as i first started looking in May, and realized a downturn was happening as I watched, thought for now I'd do daytime ins and then back outs... to avoid bigger corrections with overnight triggers. I completely forgot about bouncing, grrr, that cost me opportunity of course. I'm with Tampat that I'll wait again to see what this week's news brings. What will their guidance be? Clear as mud as usual?

     

    Did you see the SA article (I'd have to dig it up), the author calculated that if you get off the mountain part way up... you really can do just fine by missing a lot of the climb up?

     

    Doesn't work for advisers of course, cause clients wouldn't be tolerant through it. But for an individual who's goal is capital retention, it can make sense. Me though, I'm glad I didn't notice anything till May & gleefully without my knowledge, happened to be in a bull. But now what? That's been my 100,000,000 question.
    27 Jul 2013, 02:59 PM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    I would urge everyone to look at the historical prices of gold since1/1/1975. That information is available at Kitco.

     

    http://bit.ly/nInUMW

     

    Since that time, gold has had more severe down moves than stocks.

     

    We have fresh in our memories what happened in the stock market during 2008.

     

    We also have fresh in our memory that the London P.M. fix for gold on 9/6/11 was $1895 and $1,212.75 on 7/5/13, a 36% decline.

     

    That is not the worst decline in gold's price.

     

    By clicking the five year gold chart at Kitco starting in 1980, I still a price decline from over $840 in January 1980 to $290 in mid-1982 or 65%.

     

    In the next five year chart, I see a rise from $280 to $500 near the end of 1986, followed by a decline to $360 by mid-1989 or about 28%.

     

    In the next five year chart (1990-1994), I see a lot of chop, going from $420 down to $350, then up to $410 and then a steady decline down to $330, a sharp move up to $410, a sharp move down to around $340, and ending that five year period lower than where the price started in January 1990

     

    In the next five year chart (1995-1999), the price ended the five year period at a lower level again, falling from a high price over $400 fairly steadily to a low around $250 (37.5%) before rebounding a bit near the end of that period.

     

    In the next five year chart (2000-2005), gold spent the first two years meandering around $250, whereupon it started a bull move around January 2002 that lasted until September 2011.

     

    What conclusions can I draw from this history? The gold price was in a bear market between January 1980 to January 2002. The bull market periods have been over shorter time frames (roughly 1972 when the price was $45 to January 1980 and January 2002 to September 2011).

     

    During the longer term bear market, the price swings are more severe than I would normally expect during a long term secular bear market in stocks. This is not appreciated by many, but is confirmed by the historical record.

     

    Stocks are much maligned here at SA.

     

    Yet a $1 investment in the S & P 500 on January 1, 1980 would have grown to $33.64 by 12/31/2012, more by now.

     

    http://bit.ly/vFOfUm

     

    A $1 investment in 1951, the year of my birth, would have grown to $558.03 as of 12/31/2012, more now.

     

    There have been two long term secular bear markets since 1951.

     

    Stock prices will crater but so will the price of other asset classes including gold and silver.

     

    And, for those of us who have been around a few years, the bond bear market in the late 1960s and 1970s is singed on our brains. Yes, there is such an animal as a long term secular bear market in bonds. The last one lasted about 32 years:

     

    10 Year Treasury Chart Since 1790
    http://read.bi/18ocZi4

     

    The rapidly and decree of bond losses since May 1, 2013 is just a reminder that every asset class can generate both pleasure and pain.

     

    At least with bonds and dividend paying stocks, the investor is receiving income. By focusing on reliable dividend growers, that income stream will increase yearly and will provide spendable income in retirement.

     

    An article today at SA focuses on dividend generation, but used as a hypothetical a $1,000,000 dividend paying stock portfolio, which is not realistic for most Americans. It is helpful in showing how to develop income streams.

     

    The Absurdity Of Not Investing In Dividend Stocks For Retirement
    http://bit.ly/13lWpdV
    27 Jul 2013, 04:13 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    south

     

    Thank you for presenting all the data, especially on gold; I know that gold is countercyclical to the markets, meaning when markets are in bullish mode, gold is in a bearish mode and viceversa; there is no magic in this; if you look at graph of the Dow, when it started it bull run in 1982, you will see it is just opposite of gold graph; how can you tell it about if bullish or bearish back then- the ratio of Dow/gold was about 1; now the $64 trillion question is " will it happen again?"; personally I believe so
    28 Jul 2013, 12:11 AM Reply Like
  • CoinsK
    , contributor
    Comments (2736) | Send Message
     
    I started buying in 1999 so I have to use that as my indicator of how well Precious metals have done. I bought 100 oz. of Silver for $375.00.
    How am I doing now? I then bought 1964 quarters at 3 X face next,how am I doing ?
    28 Jul 2013, 08:56 AM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2727) | Send Message
     
    South, easy to pick tops and bottoms, but you have to look at the situation involved too. Volcker simply made the dollars more attractive by raising rates during an inflationary episode. Bernanke can not possibly do that today.

     

    We are taking the route of Japan with Bernanke trying to inflate to just 2%, and failing with his bouts of QE. He is fighting the deflationary credit contraction, the same way Japan has while the Nikkei lost 75% of the value same with Japanese real estate.

     

    The implosion begins in Japan, which by default, will be dollar bullish. I used to have the websites, buygoldjapa.com and the Japanese version of it. I gave them up, but probably should have kept them. Just too much going on to go after another country and I don't speak their language.
    28 Jul 2013, 02:49 PM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    The Morningstar Director of Economic Analysis, Robert Johnson, published today an article that leans bearish on the U.S. economy. He is predicting that the first estimate for 2nd quarter GDP will be .5% or less and will surprise the market. He notes that the consensus estimate is currently real GDP growth of 1%. The report will be released on 7/31.

     

    The article is pretty detailed and he is usually more optimistic.

     

    http://bit.ly/13lsBz2
    27 Jul 2013, 06:30 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @SOUTH

     

    I am guessing a flat GDP since they would never release a negative number. NEVER.. Best case .1%
    27 Jul 2013, 06:40 PM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3738) | Send Message
     
    "never"?

     

    Now you're just being juvenile...
    28 Jul 2013, 02:21 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3503) | Send Message
     
    @ Freddy

     

    I think IT's point is that there's enough manipulation right now trying to make happy feet reality, by giving a happy feet image... that negative GDP wouldn't come out of there, right now.

     

    I'd tend to agree. And "never" was to emphasize the point (in hyperbole)... and I tend to agree with the idea, even though it's being said colorfully...
    28 Jul 2013, 02:59 AM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » FRED

     

    Thank you for not calling me an old man. I will take juvenile all day long.

     

    Now where's my thimble?? Nap time !!
    28 Jul 2013, 03:05 AM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3738) | Send Message
     
    Accusing the BEA of manipulating GDP only serves to reduce the conversation to a tad above the lunatic fringe (aka shadowstats). FYI, negative GDP was announced for Q4 this past January ... the first time since mid 2009.
    28 Jul 2013, 12:26 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » FREDDY

     

    Wasn't it revised up to a positive number? Us lunatics kinda forget.
    28 Jul 2013, 01:43 PM Reply Like
  • Windwood Trader
    , contributor
    Comments (2442) | Send Message
     
    >IT-

     

    Bill, here is a nice article about a hi-yield portfolio consisting primarily of Master Business Development Companies- BDCs including (PSEC).

     

    I like the article but be advised that (SLRC) fell on its sword last week but may be a steal at current prices even with the reduced dividend.

     

    http://seekingalpha.co...

     

    WT
    27 Jul 2013, 07:00 PM Reply Like
  • tampat
    , contributor
    Comments (995) | Send Message
     
    Stocks here on SA are maligned?
    I dont think so.
    Isn't this primarily a stock site?
    There are those who think stocks will rise, those who think they will fall, but its still all about stocks. I dont think its stocks that are maligned, even from those who have a bearish bias. I think there are a lot more positive articles on stocks than negative.
    Look at this blog as a microcosm, there are many more bullish stock investors who like stocks than there are bears or stock maligners.

     

    No one will argue with all your points about stock gains since the 1950's or whatever data points you are using.

     

    I think your thesis on gold is wrong.
    Your analysis of its performance in the 70's, 80's, 90's are correct but I question the relevance.

     

    Now isn't then.

     

    The world has seen a parabolic rise in money and debt like never before in history and this will keep increasing exponentially.
    It isn't solvable.

     

    $50 or 100 trillion of debt is really nearly impossible to imagine.
    It would take a stack of $1000 bills 48 miles high to equal just $1 trillion. Now multiply that by 100.
    The debt can never be repaid.

     

    As the debts and money supply keep increasing at an exponential rate it will overwhelm the system and a new system will need to be created. It isnt that far off, we're talking years, or less, not decades.

     

    I'm not sure how gold will play a role in this or even if it will.
    However, I'm willing to take the chance that during the panic of the transition from the old system to a new one that gold will, for a time, be an asset that many will want out of good old fashioned fear and because of its multi-thousand year history as a store of value.

     

    Currently only about 1-2% of people own gold and drove the price up to lets say $1300 an ounce. Think about if just another 2% of the people move into gold, or 5%, or 10%. Then the gold price rises exponentially by leaps and bounds. In the future $1300 per ounce may seem like penny candy.

     

    Whatever happened in the 70's or 80's isn't relevant and people would be making a mistake to use those times as comparison to todays economic and financial environment.

     

    Got gold yet?
    27 Jul 2013, 07:09 PM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3738) | Send Message
     
    The CBO charts and data imply your federal debt will rise to $125 trillion by 2040. Heck, I used to show them too: http://bit.ly/173xsvY

     

    But we have always known tipping points and the bond vigilantes will get in the way of that nasty scenario.

     

    The ride ends in 2024 @ $26 trillion...

     

    debt wall charts: http://bit.ly/vIM1wQ
    28 Jul 2013, 02:28 AM Reply Like
  • John Wilson
    , contributor
    Comments (1093) | Send Message
     
    South Gent

     

    Here is my shot at your quiz.

     

    In my opinion, one should not put too much faith in the credibility of the CPI in calculating gold's price. I would say that overhanging debt that will never be repaid is more relevant. Debt also represents future money supply - latent fiat money, not printed into existence yet. But the debt may not turn into money if the debt is repudiated.

     

    You can try to peg gold to assets, ("following objective criteria for valuing an asset"—you ask for four) but they in turn are valued in floating fairy dust money so their current value floats too. Gold may be valued relative to silver. I would go along with that, and based on that, I am buying real silver.

     

    I will take a shot at the four assets- how about:
    1. silver
    2. a parcel of land,
    3. livestock units (be it goats, sheep or cattle), or a horse,
    4. a suit of clothes.

     

    These items are what gold was used to buy historically. Ask, "historically, how many goats would one ounce of gold buy?", then multiply the number of goats by the current market price for goats and there you have it – the current market price of gold. Check with Tom Luongo on this. Repeat for each of the other assets.

     

    Here is my quiz: How do you value the price of silver?
    Answer:
    The value of an ounce of silver should equal one good steak dinner at a restaurant. This is substantiated by Matt Dillon and Doc having a streak diner at Delmonico's in Dodge City.

     

    My alternative method is based on the 1873 selling price of a Colt Single Action Army six-shooter, which sold for $17 to $20 at the time, which meant 17 to 20 ounces of silver.

     

    http://bit.ly/12TPoC6

     

    A Colt Single Action Army six-shooter (new) is now is at least $1500, or an Italian made replica (Uberti) is about $500. I will take an average of the two, though I think the Colt is more representative.

     

    The average is $1000. So if the Colt six-shooter originally sold for $20 or 20 oz of silver (high range) in 1873, then $1000/20 is $50

     

    Fair price of silver is $50 to $75 an ounce.
    Reco: buy silver.
    27 Jul 2013, 07:46 PM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    So John, I own silver. I am willing to sell everything that I own to you right now, including the sterling silver flatware, at the low end of your fair price which is $50 an ounce, since I want to give you a bargain and the ability to earn a fair rate of return on your investment.

     

    I did not realize that I was receiving an unfair price when I sold junk silver coins on 9/6/11 at a slightly lower price.

     

    I am going to stick my head out on a limb and make a prediction. Silver will see $12 an ounce before hitting $30 again and will not hit $50 in my lifetime or yours except of course for our transaction in the event you want to buy my silver at $50 per ounce.

     

    Before the FED announced QE on March 18, 2009, silver closed at $12.61 per ounce:

     

    http://bit.ly/17mLc1B

     

    While cause and effect is tricky and never subject to absolute dogmatic statements, both gold and silver took off to the races with QE. We know that as a historical fact.

     

    Why? The same reason long treasury bonds went down at first. The market rationally believed that QE would cause inflation.

     

    While I understand that many believe that the BLS CPI numbers are phony and may even be part of a vast government conspiracy, I would not call that position a majority view or even close to one. Eventually, the participants in the market had to accept that QE was not causing inflation and consequently started to take back more than one-half of the move since March 18, 2009; and possibly all of it in the weeks and months to come.

     

    Gold and silver both did very well during the stock market run in 2003-2007, but gold started to stagnate in September 2008-March 2009 during the peak of the financial crisis. So there is some historical evidence that gold will not go up when the SHTF since most of us can agree that the SHTF in October 2008.

     

    On 9/29/08, the P.M. London gold fix was $905 and was $893.25 at the P.M London gold fix on 3/18/09. By December 2, 2009, gold closed at 1,212.50 at the P.M. fix.
    27 Jul 2013, 08:32 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » "I am going to stick my head out on a limb and make a prediction. Silver will see $12 an ounce before hitting $30 again"

     

    NAME THE BET !! Keep in mind that I am talking about ASE'S and want to be able to add the premium one has to pay. I am willing to leave the shipping out as I am a nice guy ...

     

    Spot price is useless. I want to use the REAL price as well. Go check out Ebay what people are paying !!
    27 Jul 2013, 08:44 PM Reply Like
  • southgent1951
    , contributor
    Comments (2520) | Send Message
     
    Tampat: I own gold and silver. I did sell on 9/6/11 some of both:

     

    Snapshot
    http://bit.ly/XqU0Bx

     

    The bears and gold bugs here at IT's blog have run off most of the stock bulls except for BlueSkyForever and me, but I am more of calf than a bull.

     

    I have been a net seller of stocks over the past few weeks. I am bullish on stocks over the intermediate and long term.

     

    Perpetual bearish authors and commenters here at SA, in my opinion, for outweigh the bulls.

     

    I would not include those authors and commenters in the foregoing calculation who are merely bearish or bullish about a particular stock but only those that express opinions on broader macro type issues.

     

    Possibly, gold and stock investors have not received the memo about inflation, money supply, exponential debt creation, or whatever argument is being used now to justify the price of gold and other precious metals, when taking gold down 36% between September 6, 2011 and July 5, 2013 and stocks way up, with the S & P 500 up 40% during that same period, excluding dividends and the reinvested value of the dividends.

     

    S & P 500 Closing Price on 9/6/11: 1,165.24 and at 1631.89 on 7/5/13
    http://yhoo.it/1aPzJsy

     

    Possibly, the future of gold will be different from the last few decades and the stock bubble that has been forming due to irrational exuberance since the DJIA hit 44 back in 1932 is about to burst splattering all of those fools who have done so well but will soon receive their justice:

     

    Long Term Chart of the DJIA Since 1900-Part of the Irrelevant Past

     

    http://bit.ly/vLHnKP

     

    I understand. A new age is upon us. This time is different. The past is not prologue, nor is it even relevant, except to those who wish to cloud investor's minds about the really bleak future ahead of us.

     

    A few years ago, American households were heavily leveraged and now the DSR ratio is below the lowest point since the FED started to compile data in 1980:

     

    http://bit.ly/MiNM1D

     

    Household debt to GDP has fallen from about 100% in 2009 to 85% now:
    http://bit.ly/X6wZju

     

    The last report by the FED showed that household net worth increased by about $3 trillion in the 2013 first quarter from 12/31/12 and was then at $70.3 trillion (a lot more now with the home price and stock market rise):
    http://1.usa.gov/KDf0sF

     

    The federal government's debt as percentage of GDP is falling fast as spending cuts and tax increases reduce the deficit.

     

    April: Calculated Risk Blog re: GS Report
    http://bit.ly/12p4bFi

     

    GS estimates that the federal budget deficit as a percentage of GDP which hit 10.1% in fiscal 2009 will be down to 3% or less in fiscal 2015. The F/Y ends in September of each year.

     

    The government reported a surplus of $117 billion for June:
    http://bit.ly/1aPzLko

     

    Or maybe, stocks will continue to smash the non-income producing performance of gold bullion over the coming years and decades, just as they have done for my entire life.
    27 Jul 2013, 08:08 PM Reply Like
  • Interesting Times
    , contributor
    Comments (10139) | Send Message
     
    Author’s reply » @SOUTH

     

    "The bears and gold bugs here at IT's blog have run off most of the stock bulls except for BlueSkyForever and me, but I am more of calf than a bull."

     

    Uh I think you forgot quite a few like FEAR for one, One other poster ran himself off when he could not prove his 20% annual gain. He was the ultimate bull. KRUSTY is away in Africa on vacation. (I hear an elephant chased him up a tree and he was also caught running away from a real bear!! )

     

    We have TAKEFIVE, NOTRUB, EXTREMEBANKER, USER... and I can list 5 more if I need to!! All are bulls...

     

    So that is an unfair statement. Add up the posts daily and you bulls far outpost any bears. I am not upset, I just don't want people reading that ANYONE gets run off at all !!
    27 Jul 2013, 08:25 PM Reply Like
  • John Wilson
    , contributor
    Comments (1093) | Send Message
     
    South
    Sorry, but I won't take your offer to buy your silver at $50. I was just showing what a relative price for silver would be based on what it has purchased in the past. I stand by my "fair price" - based on steak dinner and Colt 6 shooter, and hold that the market which can be irrational is now oversold or cheap, and silver can be bought here.

     

    It may go to $12, though I doubt it. If it did, it would be a screaming buy.

     

    Those who hold any sizable position in stocks better hope that it does not go to $12 as we would probably be experiencing severe asset deflation.
    27 Jul 2013, 09:35 PM Reply Like
  • Freddy Hutter, TrendLines R...
    , contributor
    Comments (3738) | Send Message