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Warren Buffett: Why stocks beat gold and bonds
- Thread starter zanek
- Start date
Stocks = human effort and innovation, which is why over time they will return more than anything else. But just as with anything else human, it will come with a huge risk as well, one that has to be carefully managed.
Bonds = income. Period.
Gold = security.
I bought gold way back also, back when the CEO of Newmont used to complain that no gold company could make money with gold less than 350 an ounce. I bought back at a time that when I told a work friend he looked at me like I had just landed from Mars.
But I have no illusions about the long term return of gold vs stocks. Stocks will win, easily, over anything else you put up against it. Gold will protect you against inflation, bonds will give you income. Stocks are the only thing that will allow you to keep up with the advancing standard of living that the most advanced economies in the world take for granted.
Bonds = income. Period.
Gold = security.
I bought gold way back also, back when the CEO of Newmont used to complain that no gold company could make money with gold less than 350 an ounce. I bought back at a time that when I told a work friend he looked at me like I had just landed from Mars.
But I have no illusions about the long term return of gold vs stocks. Stocks will win, easily, over anything else you put up against it. Gold will protect you against inflation, bonds will give you income. Stocks are the only thing that will allow you to keep up with the advancing standard of living that the most advanced economies in the world take for granted.
The debate is sort of meaningless since we are told "stocks" beat gold, but "which" stocks? Tell the numerous people who bought once flourishing stocks, only to find 20-30 years later the companies were worthless. The survivorship bias is overwhelming when we want to compare some arbitrary stocks to precious metals.
Further, it's important to define some sort of time horizon. Given enough time, I'm sure a "group" of stocks is a better bet than gold, but what about from 2002 thru the present. Ten years is quite a bit of time and last I checked many of the indicies have been chopping sideways for the better part of a decade. Meanwhile, precious metals have handily outperformed this "group of stocks".
As is usually the case with Warren's public proclamations, there is a fair bit of propoganda attached to anything he has to say. It's become crystal clear that he morphed from a respected market "oracle" into a political mouthpiece.
Further, it's important to define some sort of time horizon. Given enough time, I'm sure a "group" of stocks is a better bet than gold, but what about from 2002 thru the present. Ten years is quite a bit of time and last I checked many of the indicies have been chopping sideways for the better part of a decade. Meanwhile, precious metals have handily outperformed this "group of stocks".
As is usually the case with Warren's public proclamations, there is a fair bit of propoganda attached to anything he has to say. It's become crystal clear that he morphed from a respected market "oracle" into a political mouthpiece.
Debate? Did you read the whole article at the link?
More practically, Buffett's called The Intelligent Investor: The Definitive Book on Value Investing. âby far the best book on investing ever written.â It's $13.55 at Amazon.
More practically, Buffett's called The Intelligent Investor: The Definitive Book on Value Investing. âby far the best book on investing ever written.â It's $13.55 at Amazon.
Quote from denner:
The debate is sort of meaningless since we are told "stocks" beat gold, but "which" stocks?
I believe that virtually all the evidence supports the proposition that well chosen equities will outperform both bonds and gold over the long haul. I also believe that we are at an extraordinary point in the cycle and the only "way out" for the those in power is to kick the debt can down the road (and then kick it again and again) as far as the eye can see by debasing currencies until they are no longer reliable stores of value.
While others will see more choices, for me there are only three that are viable: Bet on history and hold equity, bet on inflation coming before depression and hold precious metals or other hard assets or be nimble and liquid and use futures to bet that I can out trade whatever the future brings.
I'll take door number three.
While others will see more choices, for me there are only three that are viable: Bet on history and hold equity, bet on inflation coming before depression and hold precious metals or other hard assets or be nimble and liquid and use futures to bet that I can out trade whatever the future brings.
I'll take door number three.