Dow Industrials Reach 42-Month High
The mark hit by the Dow today means that, if an investor had formed a portfolio in June 0f 2001 of the large-cap stocks that make up the Dow Jones Industrial Average, and had weighted their contributions to the portfolio as the Dow does, that investor today would have realized a total return and an annualized return on his or her investment of zero percent.
That's right: zero percent.
Published 12/21/2004 08:55:15 PM
<< 23 Comments Total
Four years of sideways....
- oddjob
Actually, four years of reverse. The nominal return is zero. Adjusting for inflation, the real return is negative.
Red ink: it's not just for deficits, anymore.
The Dark Wraith reaches for the grading pen.
[Lessee: Master Bush, your grade for Portfolio Management 101 is an "F"... Oh, stop blubbering! I'll give you an "F+" just to get you out of my office.]
Saw this link on another blog (the fulcrum). It seemed to fit as well here as anywhere. I can't participate, but I will be doing so in spirit!
- oddjob
Rats, forgot to devalue due to inflation!
- oddjob
[Lessee: Master Bush, your grade for Portfolio Management 101 is an "F"... Oh, stop blubbering! I'll give you an "F+" just to get you out of my office.]
More likely, Daddy & Babs on a day at the country club would confer with some of their "right people" chums and find a way to get you fired for your failure to educate.
- oddjob
DW, posted a question for you in the Pres. expresses concern over Soc. Sec. thread. (Question posted @ 9:36pm.)
- oddjob
Asked and answered, OddJob.
By the way, here's a new HTML trick for your portfolio. Normally, when you create an link, you write is like this:
< a href="*" >words to show link< /a >
where the * is the URL of the link, and you don't use spaces after or before the brackets. I use them here to keep the blog from thinking I'm actually writing a hyperlink.
Now, you can make your links so they open in a new window instead of causing the user's browser to navigate away from where it is. All you have to do is insert TARGET="_blank" before you close the initiating A HREF tag:
< a href="*" target="_blank" >blah blah blah< /a >
Try it out.
The Dark Wraith presses forward into the night.
I just tried to do that, and got the following message from Blogger (spaces added to the brackets in the usual places so that it wouldn't read this as an attempt to create a link):
Your HTML cannot be accepted: Attribute "TARGET" is not allowed: < a href="http://www.helpmefind.com/rose/index.php "target="_blank" >
- oddjob
Well, shoot.
So much for that little trick for now. I am right now communicating with the blogspot techs about a few behind-the-scenes issues like the glitch with what happens to the character right after the end of an HTML tag. I'll see if we can get the TARGET option for A HREF tags enabled; it's a worthwhile trick to have available.
The blogspot folks did help out with registration, though. Did you see my post on how to register your handle without having to create a blog or have any personal information disclosed? If you did and you're still reticent to register, I can create a registration for you that would have no way to be traced to you (as it would have only an e-mail address in my own domain, which would be blocked from disclosure, anyway). If you would like to do it that way, just say so here, and I shall e-mail you your password in a while. Otherwise, you may politely ignore this post.
By the way, my offer stands for anyone else who would like to register but does not want to do it on his or her own.
The Dark Wraith offers full-service blogging.
Good afternoon, bloggers. This is just a brief note before the daily blogging. The Dark Wraith Forums just became listed at blogwise.com.
Well, that was good news to me, anyway. At least it's a good start. Okay... the applause seems rather muted.
The Dark Wraith breaks out the Spam for a celebration.
[Fine. A small celebration, then.]
(loud and raucous applause, stamping of feet and spontaneous "wave")
Aw, shucks.
DW, Gold is now at $440 +or-. Where was it in June of 2001?
Good evening, Peter. Nice question.
The price of gold during the month of June 2001 was in the range from just under $266 to just under $275 per ounce, closing the month at a little over $270 per ounce.
That means a portfolio of gold held from June of 2001 to now would have earned an annualized yield of somewhat better than 17%!
By the way, it's not a good sign when precious metals are superior to an economy as an investment instrument. In fact, it's a very bad sign.
The Dark Wraith checks the silver in his tooth fillings.
I'll be checking in with you frequently as I do with Krugman and Rockwell. Nobody yet has said they're shit-scared about recession/depression but sometimes I can read between the lines, when they speak of enormous debt, falling dollar, etc. And oh yeah, I tried the gold gambit once back about '82 or '83. Not about to do it again. About the only thing I would invest in now is land suitable for growing food. Gold at 270 then vs. 440 now tells me that the boys in the market are hedging their bets.
Good evening, once again, Peter.
At $440 per ounce, we are no longer talking about a neatly trimmed hedge; rather, we are now approaching a fully unattended jungle.
The Dark Wraith swings the machete.
During the Great Depression, didn't the United States convince Americans to sell their gold to the Bank of London?
Me thinks there's not much gold in circulation in the United States.
wiseguy
Good evening, Wise Guy.
The story about the United States government encouraging private sales of gold during the Great Depression has been around for quite some time, and most economists claim that it is pure folklore with no basis in historical fact.
I, on the other hand, have been given first-hand accounts of the effort, one of those accounts being from an elderly man who owned a bank that had survived the major run after the Crash of '29. He said that the gold sales were supposed to have been to create a mutual reserve of some kind, but I'm not so sure about that. Perhaps at some future opportunity, I shall talk more about matters such as this; but tonight, I don't think I should get into issues that might lead me down a path where you would all think me a conspiracy theorist of some kind.
To your other point, the world has no less gold now than it did a fifty years ago. In fact, it has more; and more of it is available for purchases and sales, right now. The reason is obvious: at the prices we're seeing these days, there is obviously a serious market of buyers willing and able to bear the price. Concommitantly, at the prices we're seeing these days, there is also obviously a market of suppliers willing and able to deliver gold: if there weren't, the price would keep going up until there was.
In economics, we call that "market clearing": in a free market, the price we see prevailing is precisely the price at which the quantity being supplied will be cleared by the quantity being demanded.
That, of course, doesn't mean any of the gold is in my possession, I am ever-so sad to report.
The Dark Wraith checks under his mattress.
Just one more question before this topic disappears into the archives:
When you buy gold, are you actually using that stuff as currency, or are you merely buying stock in it?
wiseguy
I'm not DW, but I think I can answer at least a part of this.
There's more than one way to invest in gold. The most obvious is to purchase it outright. Probably the easiest way for an individual to do that is via gold coins (such as American Eagles, Canadian Maple Leaves, or South African Krugerrands). You could use such a coin as currency, I suppose, but nowadays they don't have any guaranteed monetary value. Instead, what you are purchasing is a piece of ornamented gold guaranteed by its issuing government to be of a certain weight and purity, but not of a guaranteed monetary value. The monetary value is determined by market demand and so constantly fluctuates.
You can also purchase ownership shares of a gold mining company (which would be a traditional purchase of stock).
There are also mutual funds that invest in gold (or other precious metals) in various ways, and there are probably other investment vehicles for precious metals that I don't know anything about at all.
- oddjob
Good morning, Wise Guy.
You can invest either way; in fact, you can invest in other ways, as well.
There are many places where you can buy gold bullion of various mints or bars with various hallmarks. The bad part about this is that you will pay transactions fees that can be so high that you're in the hole pretty seriously right out of the starting blocks.
An alternative is to purchase stock in gold mining companies. These can be dogs as performers, but some of them do exhibit the weird feature of having slightly negative "beta" coefficients. In a later thread, I'll explain in detail what beta means, but for now, consider a negative beta to mean that the non-diversifiable risk, measured by price volatility, of the stock moves counter to a normal, "market" portfolio of stocks.
If you want to live on the wild side (and quite possibly become poor beyond your wildest dreams), you can play the metals futures market. That, however, is no place for beginners to start (with apologies to the lovely singer Sade).
Not to worry, Wise Guy. I plan to revisit this subject many frequently as time goes by here on The Dark Wraith Forums. That means you and any other interested parties must keep coming here all the time lest you miss something interesting and perhaps even useful.
The Dark Wraith heads out for a while.
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