Warren Buffett: Why stocks beat gold and bonds

[failed_trad3r]

Quote from MKTrader:

Absolutely not. Unless your definition of "capitalism" goes something like this:

"Capitalism, therefore, has come to be viewed as compatible with and indeed even requiring activist government: a government that manipulates investment patterns through fiscal policy, regulates production, supervises competition through licensing and antitrust laws, stimulates exports by use of subsidies, and controls the purchase of imports with tariffs and quotas. The interventionist state, in the evolution of historical capitalism, has come to be considered the prerequisite for the maintenance of the market economy."

http://www.fff.org/freedom/0193b.asp

A decentralized system of free markets would look more like this:

http://books.google.com/books/reade...frontcover&output=reader&source=gbs_atb_hover

You're wrong. The government is now run by corporations. This is true capitalism, a true power grab. It's the corporations creating laws to benefit themselves, as to make more profit, that is what capitalism is all about. About creating advantages for your own company, with a single goal in mind, to make more money.

You are looking probably at the ideal state of capitalism ,which can never and will never exist, like the ideal state of communism which is just a mirage. Real communism, real capitalism doesnt work like that

 

[newwurldmn]

Quote from MKTrader:

He also cheerleads every bailout and stimulus package...and personally profits from them. He was once a good value investor. He's a crony capitalist scumbag now.

Oh, and he made a really bad bet on silver in 2005. He literally picked one of the worst (and few) times to invest in PMs during the last decade.

He's the last person to listen to when it comes to PMs or unbiased views on investing and the economy.

Yes. He talks his book. Who doesn't.
Yes. He cheer leaded the bailout. Are you sad that we didn't fall into Great Depression 2?
Okay, so he got 1 trade wrong. His track record is 30%/year for 40 years. I'm betting yours isn't.

And to call him a crony, means you don't fully understand what his value to his friends really is. He get's favorable deals because he's built a reputation for being an astute investor and for backing current management. That has economic value.

 

[beachhouse]

Quote from zanek:

[B

People in the comments on CNN are all making ad homieum attacks on Buffet or saying he's trying to find bag holders for the next stock drop.

What do you all think ? [/B]

I think he is trying to tranfer his bags of bad option trades to others.

He is under water right now, he needs to pump up the stock market.

If he pumps the stock market for his bad option trades, he is just a normal "investor." But coming out repeatedly on TV to pump just makes him look bad. He shouldn't over do it, because we all know he is under water, it exposes his desperation.

If his is Corzine and runs a broker firm, he probably will use customers' money to buy more options. The old man is a harm to himself.

 

[newwurldmn]

Quote from beachhouse:

I think he is trying to tranfer his bags of bad option trades to others.

He is under water right now, he needs to pump up the stock market.

If he pumps the stock market for his bad option trades, he is just a normal "investor." But coming out repeatedly on TV to pump just makes him look bad. He shouldn't over do it, because we all know he is under water, it exposes his desperation.

If his is Corzine and runs a broker firm, he probably will use customers' money to buy more options. The old man is a harm to himself.

If i recall he rolled his options down and out. So he's probably up on the new position with losses taken on the old position. Anyway the options are small potatos. Only 10Bn in notional on major indices. He probably has a 100Bn stock portfolio.

 

[Specterx]

Quote from piezoe:

The key to long term investing is dividends, or value investing as someone else has pointed out. I prefer the dividend route and only consider, for long term investing, stocks in a long term up trend with a history of raising dividends. I will buy nothing but stocks that pay dividends.

I don't understand this sort of view. You realize that dividends come out of the market's capitalization, right? It therefore makes no fundamental difference whether you're paid a dividend or not.

If you're paid a dividend and reinvest the proceeds back into the shares, your account value is the same as if the company had simply retained the earnings.

If you sell 5% of your non-dividend-paying shares every year, it's equivalent (not accounting for taxes) to receiving a 5% yearly dividend payout from the company.

Dividends are 1) a means for large shareholders to extract wealth from the business without diluting their ownership interest (not relevant unless you're a billionaire), and 2) a way for mature businesses to dispose of excess funds in the absence of worthwhile investment opportunities. Dividend-paying stocks are not automatically better or worse investments than non-dividend-payers.

 

[failed_trad3r]

Quote from Specterx:

I don't understand this sort of view. You realize that dividends come out of the market's capitalization, right? It therefore makes no fundamental difference whether you're paid a dividend or not.

If you're paid a dividend and reinvest the proceeds back into the shares, your account value is the same as if the company had simply retained the earnings.

If you sell 5% of your non-dividend-paying shares every year, it's equivalent (not accounting for taxes) to receiving a 5% yearly dividend payout from the company.

Dividends are 1) a means for large shareholders to extract wealth from the business without diluting their ownership interest (not relevant unless you're a billionaire), and 2) a way for mature businesses to dispose of excess funds in the absence of worthwhile investment opportunities. Dividend-paying stocks are not automatically better or worse investments than non-dividend-payers.

No. Myth. Market cap is paper money. Dividend is real money.

 

[newwurldmn]

Quote from Specterx:

I don't understand this sort of view. You realize that dividends come out of the market's capitalization, right? It therefore makes no fundamental difference whether you're paid a dividend or not.

If you're paid a dividend and reinvest the proceeds back into the shares, your account value is the same as if the company had simply retained the earnings.

If you sell 5% of your non-dividend-paying shares every year, it's equivalent (not accounting for taxes) to receiving a 5% yearly dividend payout from the company.

Dividends are 1) a means for large shareholders to extract wealth from the business without diluting their ownership interest (not relevant unless you're a billionaire), and 2) a way for mature businesses to dispose of excess funds in the absence of worthwhile investment opportunities. Dividend-paying stocks are not automatically better or worse investments than non-dividend-payers.

The earnings that derive those dividends are generally though to be stable which is good. Also, dividends prevent companies (especially non growing ones) from over investing in pointless projects.

 

[Specterx]

Quote from failed_trad3r:

No. Myth. Market cap is paper money. Dividend is real money.

...and to repeat, in actual practice, dividend payments are not magically taken "off the table" once paid - at least not if you're going for compound returns. You've just received a dividend payment; great, now it can sit in your account as cash earning 0.25%, or you can re-invest it back into stock.

Which leads you to precisely the same place you'd be if you'd never received a dividend in the first place.

 

[Debaser82]

Gold is up 5000 % since the early 70's.

 

[Swan Noir]

I agree with almost all of your posts and respect that you are consistent with a long term view of the bottom line, piezoe. That is why it is upsetting that a guy with your obvious good sense could possibly be pro crony capitalism?

Of course there is a bit of "crony" edge in every system. But the extent to which this once great nation has sold itself to every special interest is disgusting. Bad enough it has become a whorehouse but at this point it's not even a well run whorehouse.

I do not think you have it right on this one.

Quote from piezoe:

Capitalism, when perfected, IS crony capitalism. You should admire him for that.