[2020] A little stock market sense

[easyrider]

It doesn't matter to me how many "toys" you have when you die

I agree. You need the toys when you are alive and able to play.

Bill

 

[easyrider]

So it looks like the market hiccuped on the tariffs.

Bill

 

[WorldT]

So it looks like the market hiccuped on the tariffs.

Bill

Not surprising.

 

[Ralph Sir Edward]

choosing gold as your hypothetical says it all. Next.

Really? I used gold as the first example because I was trying to use an example with as few variables as possible. A lump of gold doesn't grow, it doesn't shrink, it can't go broke - it just sits there.

A stock represents a share of a company. The company can grow, it can shrink, it can go broke - all variables that affect the value of any stock. So investing in a stock involves making an estimate on what the company is going to do in the future. As Yogi Berra said "Predictions are a difficult thing, especially about the future." That makes using a stock for an example less accurate, because of the value is at least partially based on what the future of the company is, not just the present.

Real estate is even harder to use because of "location, location, location". (And today's great location may become tomorrow's lousy location.)

 

[WaikikiFirst]

A lump of gold doesn't grow, it doesn't shrink, it can't go broke - it just sits there.

exactly why it is not relevant to where you took this discussion. Gold = Au, a transition metal. It is an INANIMATE OBJECT.
Shares of stock are a piece of a company. A company is not an inanimate object. Comparing the 2 really makes no sense.

makes using a stock for an example less accurate, because of the value is at least partially based on what the future

Accuracy is not the discussion. In your comment about "eating your capital", the future value @ T2 is the discussion. The FUTURE IS the discussion. Au has no future. Au has a price.

 

[Ralph Sir Edward]

exactly why it is not relevant to where you took this discussion. Gold = Au, a transition metal. It is an INANIMATE OBJECT.
Shares of stock are a piece of a company. A company is not an inanimate object. Comparing the 2 really makes no sense.

Accuracy is not the discussion. In your comment about "eating your capital", the future value @ T2 is the discussion. The FUTURE IS the discussion. Au has no future. Au has a price.

Value is a variable. A company can be highly valued at one time and lowly valued at a later time. Can you project the change? Let me give you an example.

Amazon in very early 2000 reached a peak. It then sold off with the dot-com bubble. At the bottom in Nov 2002, it had dropped 98% in price. Had the company changed? No. Actually it was in better shape in Nov 2002 that in early 2000. It would later explode spectacularly to the upside. But if you had planned to sell some Amazon along the way to retire in Jan 1 2000, you might not have any Amazon left in Nov 2002; at which time the later spectacular rise would have been meaningless.

In Jan 1 2000, gold was around $300 an ounce. It has risen nearly 10 fold since then. Has gold changed? No, but the value placed on gold <has>.

And this is what it's all about. Not just determining whether or not an asset will grow or not, but making a SWAG about what assets will be valued at in the future. And there is no magic wand that says you will be right.

To make it even harder, the yardstick you are measuring by varies over time. The dollar inflates over time, making the "value" of everything go up (actually, the values aren't going up, the dollar is going down in value.)

 

[WaikikiFirst]

Value is a variable.

And ............. you're lost right there. I guess it comes from being a gold-bug, since gold produces no value. (btw, I do own some gold, but I don't kid myself about what it is) As I anticipated from the beginning, you will have no end of words while not understanding the fundamentals.
another hint: in your "eating your capital" view, you anchored yourself on how many UNITS of the thing you own. That is the wrong anchor. That completely misses the point of "Value Creation", which, of course, gold does not do. So, you are consistent, but just not using the right model for it.

 

[WaikikiFirst]

(actually, the values aren't going up, the dollar is going down in value.)

once again, spoken like a true gold-bug who doesn't understand Value Creation.

 

[Carolinian]

Really? I used gold as the first example because I was trying to use an example with as few variables as possible. A lump of gold doesn't grow, it doesn't shrink, it can't go broke - it just sits there.

A stock represents a share of a company. The company can grow, it can shrink, it can go broke - all variables that affect the value of any stock. So investing in a stock involves making an estimate on what the company is going to do in the future. As Yogi Berra said "Predictions are a difficult thing, especially about the future." That makes using a stock for an example less accurate, because of the value is at least partially based on what the future of the company is, not just the present.

Real estate is even harder to use because of "location, location, location". (And today's great location may become tomorrow's lousy location.)

The gold market has been holding up pretty well these days. I thought we might get more of a tip from the stock market people with margin calls offloading paper gold as usually happens for a short period after the stock market takes a beating, but I was able to lay in some US LIberty eagles and half eagles and some Dutch ducats at a half decent price while the dip was there.

Too bad there is not a dip in the local real estate market. We would like to add another rental property, but not at the current prices.

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[Carolinian]

once again, spoken like a true gold-bug who doesn't understand Value Creation.

All fiat currencies are going down in value, some more than others. When I was in high school, the Swiss franc was 23 censt and the British pound $2.80. Now both are a little over a dollar. The Swiss franc has proven a stronger fiat currency than the dollar and the pound a weaker one.. Compared to goods, a dollar today buys about what a dime did when I was in high school. But gold? It was $35 then and $2.935 now.

 

[RENTER]

Top 3 bull winners today
1 Coin up 3.30%
2. EQT up 2.65%
3. AMD up 2.57%

Top 3 bear winners today
1. TSLS up 4.67%
2. SEF up 3.51%
3. SNPIX up 3.44%

Portfolio up 0.09%

Good luck listening to those who pound their chests that rollercoaster rides are no big deal because they survived.

 

[Brett]

So it looks like the market hiccuped on the tariffs.

Bill

it's called a "shiver"

 

[WaikikiFirst]

All fiat currencies are going down in value

the sky is blue. Should someone use that to discuss the quality of The Blue Danube as a musical piece?
Gold bugs are wild. They have their set of comfy quotes & factoids and then they try to apply them all over the map.

 

[letsgobobby]

All fiat currencies are going down in value, some more than others. When I was in high school, the Swiss franc was 23 censt and the British pound $2.80. Now both are a little over a dollar. The Swiss franc has proven a stronger fiat currency than the dollar and the pound a weaker one.. Compared to goods, a dollar today buys about what a dime did when I was in high school. But gold? It was $35 then and $2.935 now.

yes gold has held its value pretty well for centuries. what it hasn't done is created real wealth (net of inflation)

in contrast the stock market creates real wealth (after inflation) because it represents ownership in profitable businesses.

 

[Carolinian]

yes gold has held its value pretty well for centuries. what it hasn't done is created real wealth (net of inflation)

in contrast the stock market creates real wealth (after inflation) because it represents ownership in profitable businesses.

Gold is about wealth preservation. Given levels of national debt in most countries, fiat currencies are likely to be on a downward spiral for the most part, some more so than others. In the last few years, central banks around the world have been dumping dollars and buying gold. They seem to comprehend this better than average investors.

That said, the lions part of our investments are in another hard asset, residential rental property, which in the last few years has both appreciated significantly and provided good income with our rental proceeds increasing almost 40% over three years ago and market value doubling over five years ago.

 

[letsgobobby]

Gold is about wealth preservation. Given levels of national debt in most countries, fiat currencies are likely to be on a downward spiral for the most part, some more so than others. In the last few years, central banks around the world have been dumping dollars and buying gold. They seem to comprehend this better than average investors.

That said, the lions part of our investments are in another hard asset, residential rental property, which in the last few years has both appreciated significantly and provided good income with our rental proceeds increasing almost 40% over three years ago and market value doubling over five years ago.

businesses do fine with inflation because they price their products in the same fiat currencies. That's part of the reason the stock market is up so much in nominal terms over the last forty years. no gold (or crypto ) required.

 

[Brett]

businesses do fine with inflation because they price their products in the same fiat currencies. That's part of the reason the stock market is up so much in nominal terms over the last forty years. no gold (or crypto ) required.

yes, a little inflation is OK but tariffs ... not so much

 

[letsgobobby]

As Warren Buffett says, tariffs are a declaration of war.

As Carl Von Clausewitz said, war is a continuation of politics by other means.

We seem to have entered the realm of global warfare, which isn't good for the economy. Hopefully it's a short and little war.