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Anyone who really believes the world is collapsing has lost all
sense of reality and doesn't deserve to be taken seriously.
That's why the comparisons with bread don't make sense.
I don't think the person I quoted necessarily believed that the world was going
to collapse, but was merely pointing out that if you are starving, bread > gold.
A week or so from now, your bread will be a worthless bag of mold.
Being able to convert grain to bread is what has value and if you
produce more bread than you need, you'll need a store of value ie - gold.
Lotsa gold bugs think that the world will come to them to exchange valuable
stuff for their gold at a huge profit. That they will be able to survive that way ...
They're delusional. You would be able to exchange your life for your gold ...
Lotsa gold bugs also think that countries will someday return to the gold standard.
I have never, nor will ever buy gold and encourage others to follow. In terms of opportunity cost of my capital, it is a waste of "time."
Gold is pretty, doesn't tarnish like silver and a good electrical conductor. This aside, it has negligible intrinsic value. It does not produce nor yield anything. An ounce now is an ounce later. By purchasing gold you are merely hoping someone else will pay more for it in the future.
See Berkshire Hathaway's 2011 annual letter (page 18) for Buffett's excellent take on gold. He compares owning all gold to 400 million acres of US cropland and 16 ExxonMobils.
Quote:
A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.
Faced with the choice to buy a pretty rock or shares of great companies that produce and yield profits, the latter wins. The loss is not mourned.
for 5000 years there has always been someone coveting that pretty rock. you can be sure that will not change for quite a long long long time. the pretty rock can be worth more than the ugly green paper that backs the value of those stocks.
the only reason your stocks have value is someone is willing to take that inert piece of paper ,our dollar that backs the value in them.
I have never, nor will ever buy gold and encourage others to follow. In terms of opportunity cost of my capital, it is a waste of "time."
Gold is pretty, doesn't tarnish like silver and a good electrical conductor. This aside, it has negligible intrinsic value. It does not produce nor yield anything. An ounce now is an ounce later. By purchasing gold you are merely hoping someone else will pay more for it in the future.
See Berkshire Hathaway's 2011 annual letter (page 18) for Buffett's excellent take on gold. He compares owning all gold to 400 million acres of US cropland and 16 ExxonMobils.
Faced with the choice to buy a pretty rock or shares of great companies that produce and yield profits, the latter wins. The loss is not mourned.
Gold will still buy the same amount of farm land that it would buy 100 years ago. Your stocks & US dollars will not even come close. Every stock in the DOW Jones 100 years ago has gone bankrupt & the US dollar today is only worth 4 cents compared to 100 years ago. Unless you are politically connected & trade stock futures for a living like Buffet you will not out perform gold. Wallstreet makes it's money off of suckers who do real work for a living & let a chunk of their pay go into their 401K or pension fund. Your 401K & pension will lose purchasing power compared to your contributions or be stolen all together before you retire.
for 5000 years there has always been someone coveting that pretty rock. you can be sure that will not change for quite a long long long time. the pretty rock can be worth more than the ugly green paper that backs the value of those stocks.
the only reason your stocks have value is someone is willing to take that inert piece of paper ,our dollar that backs the value in them.
There is no way an everyday worker can pay close enough attention to Wallstreet to not get taken by it. The only ones getting ahead are the criminals on Wallstreet. Again 100% of the companies that were in the Dow Jones 80 years ago have wiped out their share holders since then. The Dow Jones swaps out the losers for the winners to keep the stock market illusion alive. Also there are no government bonds or savings accounts keeping pace with the true rate of inflation. The CPI is rigged by use of substitution & does not include food, energy, insurance, taxes, housing, etc. Executive Order 12631 that created the stock market plunge protection team is the only reason stocks did not tank to the level where an ounce of gold equaled the Dow Jones again.
Iowa farm land price has increased over 8% a year every since the US dollar went off of the gold standard in 1971. So has gold, fertilizer, water, utilities, medical, crude oil, etc. You know - just the basic items necessary to sustain your life on earth.
Debt is rapidly exceeding GDP. We will also have to raise the debt ceiling again before 2013. They lied again when they told us the last debt ceiling raise was good until the newly elected congress & POTUS took over in 2013.
jim cramer, let's listen. 65 and 6 is your record... you have to have a lot of them because it's more systemic than we ever thought. yeah, when we began looking at insider trading cases, which were being looked at, a lot of the cases we brought, the investigations began with the fbi and the ftc before i got there, and we continued them and got many new ones. a year and a half ago, i said given everything we had seen, and how casual it was, and how arrogant people seemed to be acting, that it the rampant. i think that was proven by the number of cases that we brought. we brought 71 cases and we have 65 convictions and 6 are pending. it's dishartening the level of insider trader that we have proven for a lot of reasons because i think people need to believe that the markets are fair, and the same rules apply to everyone, and every time you have a case of insider trading, you're showing confidence and that belief is misplaced, and it's disheartening because of the cases brought by my office and others that it's not limited to one industry, not limited to one type of pe geography. you have it in all of the industries, and when you see the kind of insider trading cases we have been bringing of late, which is different from the classic insider trading cases you have seen before, you get concerns about culture at trading entities and companies, because what we have have shown from cases proven in court, is they are people developing networks of sources so if they don't get the information from one source at particular company, they might get it from another source, if they can't get it from that source, they have a stable of other sources from places called expert networking firms, so the problem and the concern you have about culture and this problem is far beyond the fact of a single insider trading indication or act, because we're bringing, in individual cases, multiple count prosecutions, and i think in the old days you would not see that level of pervasiveness. why should we buy a stock again. i don't want to buy a stock, because i have a feeling that someone knows more than i do. i do my homework and i do my best. i don't think you're allowed to buy stock -- recommend. look, part of our job, is exposing these cases and showing we can have an effect, is to bring people back to a level of confidence in the market. i was once asked at a forum like this, isn't it the case that these cases are under mines people's confidence in the market. that's an od question, it's the conduct that we're uncovering that should be bringing people's confidence to a lower level. and i think if you have open, aggressive, fair and proper and proved cases that you bring, and you show you're having an effect, which i believe we're having, i think that's the kind of thing that overtime gives people confidence and tells them they will get the same fair shake as everybody else. as somebody who tried and failed to get a job in your audience. i am continually amazed how business people believe that the u.s. attorney's office is the repostory of people that could not get a job in public practice, and they don't fear you. do these people actually say that? look. the kind of people that come to my office are -- and i'm blessed to inherit an office that include former secretaries of state and people who ran for governor, and people's whose names are in law school buildings, some of the smartest and most indegty filled lawyers and prosecutors that the country has ever seen. i don't think they're second tier to anybody, and i have seen very much people who are incredibly privileged and smart, and lowers sitting in jail cells because they thought they were too smart for public servants that engage in law enforcement. the other thing i will say about your question is it is true some people don't have a business background, and we appreciate that. in the say way there are members of boards that don't have subject matter expertise about companies they're supposed to be overseeing and monitoring. and the same is true when ceos go from one industry to another. we take great care to make sure we understand the facts, we have discussions -- i have at in the library of my office on a number of occasions when we're talking about the state of play for a financial organization or orz, and the cfo or ceo comes or the general council comes, and we have experts, and we consult, and we talk about what business model is, and if people say to us you don't understand what you're talking about, we say prove us wrong, you know what? cheating is cheating and lying is lying... i'm sure we have a lot of people who are worried -- i hear people worry so much about fiscal cliff, what it could do to their firm. they worry about what the break of the euro could be, the italian bond market, but there is a systemic risk they're not worried about, and that is you rolling that grenade into their office, why don't they put it in there with the euro and the fiscal cliff? so, i think you're right. i'm agreeing with you a lot today. i spend time not only talking to groups like this, but business schools, board of directors, and security lawyers about this very issue. people spend a lot of time thinking about external things and thinking about the bottom line as they should, and a lot of time thinking about the business model and i think they forget about culture within a firm, and culture is important not just at an u.s. attorney's office, not just in government, not just in congress, not just at any school or institution it's important. at a business organization and in particular at financial institutions it i'm shocked and amazed at how few people think about that. you have a conference named delivering alpha, but i wonder in my conversations with people, not sitting and reviewing indictments, that they're not spending enough time thinking about the kinds of people they're hiring, the culture they're creating in their firm -- the thing that happens to me a lot, and we talked about this, is in many police stations, not just in the business community but in too many institutions, but we're here to talk about the business community i think, of people wanting to come as close to the line as possible. and they think my job, and the job my corporate council should be is to tell me how close to the line i can get to maximize my profit without going over the line. the problem with that is is it is a dangerous game to play. it's like a person trying to find a way to have has much to drink as possible in a bar, but not get a dui. if you're really clever, smart, good about figuring out what you've eaten and the alcohol in the drink, and you're smarter than all of the people in the room. i suppose you can do that for awhile, but how long will it be before you blow the limit and you kill someone on the highway... as i understand it and people in my office are conditioned to understand it -- that the grenade analogy that some people say, you have to understand when you're assessing risk, you're talking about at what cost you're delivering your alpha, you have consider catastrophic risk of a mere investigation
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Last edited by KrazeeKrewe; 07-31-2012 at 03:38 PM..
. Again 100% of the companies that were in the Dow Jones 80 years ago have wiped out their share holders since then. The Dow Jones swaps out the losers for the winners to keep the stock market illusion alive.
No one has been wiped out w/a long term diversified low cost portfolio of equities and bonds to their risk tolerance....
Unfortunately you like to highlight sensational very noisy doomsday stories that make no sense to the rational investor w/a long term view....
I suggest you follow a site like this where people can help you find your way....
I have never, nor will ever buy gold and encourage others to follow. In terms of opportunity cost of my capital, it is a waste of "time."
Gold is pretty, doesn't tarnish like silver and a good electrical conductor. This aside, it has negligible intrinsic value. It does not produce nor yield anything. An ounce now is an ounce later. By purchasing gold you are merely hoping someone else will pay more for it in the future.
See Berkshire Hathaway's 2011 annual letter (page 18) for Buffett's excellent take on gold. He compares owning all gold to 400 million acres of US cropland and 16 ExxonMobils.
Faced with the choice to buy a pretty rock or shares of great companies that produce and yield profits, the latter wins. The loss is not mourned.
Buffett follows the "the world will always need stuff so buy shares in the companies that make stuff" rule.
He's right. People will always need stuff.
Until they scale back.
The point is a truly diversified portfolio will catch these upswings and downswings and benefit you in the long run.
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