The gold bubble

[Paulie]

I agree, but would add that I would not be the least bit surprised of gold is lower, substantially lower, in the future. The point is that we never really know what will happen, do we? That is why most people diversify amongst asset classes.

god, that's so BORING though

It is Boring, but it usually makes you more money. Most investors fail to even match the market returns. They buy high and sell low. They chase returns and "hot" asset classes (like gold), they pay managers to tell them what to do, and end up losing money.

Indexing beats 80% of the mutual fund managers out there so why even screw around trying to pick a mutual fund? You go ahead and buy any actively managed mutual fund you want, I'll buy the matching index fund. wake me up in ten years and I have an 80% chance of beating you. I'll take those odds any day.

PS- When I want excitement I go to a hockey game.

If trading and investing doesn't excite you, you aren't doing it right.

 

[Zander]

god, that's so BORING though

It is Boring, but it usually makes you more money. Most investors fail to even match the market returns. They buy high and sell low. They chase returns and "hot" asset classes (like gold), they pay managers to tell them what to do, and end up losing money.

Indexing beats 80% of the mutual fund managers out there so why even screw around trying to pick a mutual fund? You go ahead and buy any actively managed mutual fund you want, I'll buy the matching index fund. wake me up in ten years and I have an 80% chance of beating you. I'll take those odds any day.

PS- When I want excitement I go to a hockey game.

I wouldn't recommend most actively managed funds.

I think a good way to manage asset allocation is to have a target, then trade around that target. For example, if your asset allocation is 50% stocks and 50% bonds, you rebalance in a band, i.e. +-10%. So if your portfolio becomes 40% stocks and 60% bonds, you sell 10% of bonds and buy 10% stocks to get back to 50/50.

A better way, I think, is to trade around valuations. So when stocks get expensive, you sell to some target, and when they get cheap, you buy to some target.

I like the bands approach too. The key is rebalancing.

But right now I am a freakin' hypocrite......!!! I am sitting in 100% short term treasuries and cash. I am waiting for the "big decline" before I return to my indexing strategy that has worked so well for me in the past. Personally, I think we are in for a 6 year bear market in stocks. So I am not anxious to jump back into equities anytime soon. Bonds are due for a fall thanks to artificially low rates. So I am not too quick to add bonds, but will when the rates are back to normal. And the precious metals have been on a tear for 8 years! So I am reluctant to buy gold now.

So........I will sit on cash for now and continue to save money.

I am looking at properties though. Cap rates are in the 8%-9% range for Class A office space in Los Angeles. .......

 

[Zander]

god, that's so BORING though

It is Boring, but it usually makes you more money. Most investors fail to even match the market returns. They buy high and sell low. They chase returns and "hot" asset classes (like gold), they pay managers to tell them what to do, and end up losing money.

Indexing beats 80% of the mutual fund managers out there so why even screw around trying to pick a mutual fund? You go ahead and buy any actively managed mutual fund you want, I'll buy the matching index fund. wake me up in ten years and I have an 80% chance of beating you. I'll take those odds any day.

PS- When I want excitement I go to a hockey game.

If trading and investing doesn't excite you, you aren't doing it right.

Hockey baby, Hockey!!!

 

[Toro]

I am looking at properties though. Cap rates are in the 8%-9% range for Class A office space in Los Angeles. .......

There are certainly interesting real estate plays. I bought a piece of land down 92% from its highs that was ridiculously priced. 8% class A cap rates in LA are pretty enticing.

 

[Polk]

I don't like to make predictions because predictions make people look stupid - and I don't need any help doing that - but I would not be in the least bit surprised if gold was higher, substantially higher, in the future.

I agree, but would add that I would not be the least bit surprised of gold is lower, substantially lower, in the future. The point is that we never really know what will happen, do we? That is why most people diversify amongst asset classes.

We don't ever know what will happen in the future, but we can make calculated assessments of probability. And I assess that the probability of rising gold prices are higher than falling gold prices, at least in the near and intermediate-term.

Me too, but it's not based on any sort of fundamentals in the market. It's based on irrational hysteria.

 

[PLYMCO_PILGRIM]

With gold at record prices, nearing $1200/ounce, one must be careful and realize that sometime, probably in the first quarter of next year, the Fed will raise interest rates and pop the gold bubble as gold will most likely fall to under $900/ounce. Remember, gold is a commodity. Like all other other commodities, whenever it hits a meteoric rise, it will always, ALWAYS have a meteoric drop within six months time. Just remember the oil bubble of 2008 as the perfect example of that.

I hope everyone here is careful with their gold purchases.

David you are mistaken.

The price of gold in 1980 was at $850. If you adjust that for inflation it would be worth $2200 today.

The price of gold is actually very low right now adjusted for inflation.

Gold (Inflation Adjusted) | The Big Picture

 

[Neubarth]

As most can clearly see, Gold barely keeps up with the rate of Inflation if you even out the peaks and valleys.

Gold is a pretty yellow metal that some people cherish because it does not tarnish. They are welcome to pay whatever they want for it. When it is seriously hyped, it goes up in price and when the hype dies down, it always falls back to previous value with allowances being made for inflation. You'd do better to buy Nokia right now.