Stock Market Thread
- Thread starter PsychicOtter
- Start date
ADF
Member
A bank account is probably a dangerous place to hold money these days
It's not like you're earning any interest on it.Post MF Global and Jon Corzine failing to get prosecuted, anything can happen. If they're not going to prosecute someone for STEALING the contents of their clients deposit accounts, placing it as a bet and then losing the lot. Just let him walk away, no criminal prosecution. Then what is safe? Why wouldn't others try it if Corzine got away with it? If you win, mega profit. If you lose, well apparently you can just walk away with no consequences.
PsychicOtter
Otter Missionary
Bonds are probably a better option.A bank account is probably a dangerous place to hold money these days
Post MF Global and Jon Corzine failing to get prosecuted, anything can happen. If they're not going to prosecute someone for STEALING the contents of their clients deposit accounts, placing it as a bet and then losing the lot. Just let him walk away, no criminal prosecution. Then what is safe? Why wouldn't others try it if Corzine got away with it? If you win, mega profit. If you lose, well apparently you can just walk away with no consequences.
ADF
Member
Bonds are toxic, the markets are just beginning to realise that by downgrading government debt for monetising their debts at such a scale. Of course the governments just shrug it off, keep monetising the debt, then hold up their own purchases of their own debt as evidence that the markets still have faith in them
If I loaned myself money, wonder what interest rates I could offer myself? I imagine they would be quite low XD
Of course this madness just keeps bringing ever more brain twisting surprises. Not long ago the Bank of England paid the UK government profit it had made on loans made out to the UK government...
As I said, if not gold then what else?
Term_the_Schmuck
Most Interesting Man on FAF
It's frozen concentrated orange juice. >:V
A bank account is probably a dangerous place to hold money these days
Post MF Global and Jon Corzine failing to get prosecuted, anything can happen. If they're not going to prosecute someone for STEALING the contents of their clients deposit accounts, placing it as a bet and then losing the lot. Just let him walk away, no criminal prosecution. Then what is safe? Why wouldn't others try it if Corzine got away with it? If you win, mega profit. If you lose, well apparently you can just walk away with no consequences.
Actually I am earning interest.
ADF
Member
If you want to play semantics, then sure, you're technically earning interest. But interest isn't simply about making a return on savings, it's also needed to protect against inflation. If interest rates are below the inflation rate, then your savings are losing value not gaining.
This is of course if you believe the reported rate of inflation by the government, which I do not. America in particular when you dig into the details severely under reports their inflation rate.
Here's some videos talking about it.
http://www.youtube.com/watch?v=Iloh5jL-ujE (03:17)
http://www.youtube.com/watch?v=pwI3Nya5L9g (Note I don't like Peter Schiff, but his point remains all the same)
PsychicOtter
Otter Missionary
ADF means that because the value of your money is growing at a level that is lower than the growing rate of inflation, you're not really gaining value at all. But you're right that some interest is better than none.
ADF
Member
Let's say the inflation rate is 2%. You go to the shops and notice that your $2 beverage is now $2.04. It's gone up in cost by 4 cents right? Actually no. If the inflation rate is 2%, and the cost of the drink has gone up 2%, then the price has remained the same. The increase of 4 cents is just reflecting a reduction of 2% in buying power to the dollars you used to purchase it.
So the cost of the drink hasn't gone up, the buying power of your currency has gone down.
If your annual wage increase hasn't gone up by the same amount as inflation or more, or if the interest on your savings is lower than inflation, then you have lost money. Even if you've earned some interest on your savings, you've still lost money, because the amount you've gained is lower than the rate your money is losing value.
Dividends are good as a regular supplementary income. In that US corporations attract for they pay quarterly, in contrast to the once-a-year model used here, but a notably smaller annual yield would discourage me.
This is a terrible attitude.
Whilst you may have gained money in nominal terms, it is certain the prices of all goods and services you purchase have risen at a greater rate compared to the interest you got in the same period of time.
Id est: it is a terrible thing to let one's assets sit in a transactional account. There are always better alternatives.
Deo
The hatred of FAF personified
Bonds are dying at the moment. A stable stock like Exxon Mobile with reinvestment of dividends results in much larger gains. A roughly 7% vs 2.5%. (If I remember correctly). It's just that the bond market is flooded since the 2008 and 2010 economic scares.
Golden
Member
Real Estate is probably the safest thing to invest in right now, but you definitely need a lot of background knowledge. House flipping can be risky sometimes, particularly if you're inexperienced in the trades and don't have any background knowledge. Even then, things could still get messy (you could start ripping up the drywall and God knows what you're going to find).
PsychicOtter
Otter Missionary
A great tool for evaluating companies:
http://money.msn.com/investing/stockscouter-stock-ratings.aspx
Obviously you can't rely too heavily on this and you need to do your own research, but it's a helpful gadget.
http://money.msn.com/investing/stockscouter-stock-ratings.aspx
Obviously you can't rely too heavily on this and you need to do your own research, but it's a helpful gadget.
ADF
Member
Gold is about wealth preservation, not making more money. We are living in highly inflationary times and there are no safe havens due to ZIRP, so it's more about keeping hold of what you have than making more money.
All these cash for gold companies trying to get the public to sell their gold are reliant on public ignorance on how gold works. When gold is at a all time high, that just means currency is at a all time low. So they're trading their inflation protection for rapidly devaluing paper...
PsychicOtter
Otter Missionary
I think SIX just means that because he works in finances, he isn't allowed to be involved in the stock market to prevent insider trading. It's the same with Jim Cramer. He has a nightly television show, so if he was allowed to invest he could just rave about a certain company, everybody would buy in, and he'd make tons of cash. It gives him an unfair edge, so it's illegal.
Tigercougar
Active Member
I'd think better of the stock market if it didn't crash every ten years and fuck over people's retirements.
ADF
Member
Businesses are in survival mode and are building up large cash reserves for anything that may be around the corner, something the government keeps banging on about; trying to get them to invest it. That and a lot of old favourites are going down, we don't know who is the next Comet or HMV.
Inflationary periods favour commodities; whether it be metals, animal products, food or energy. While a company could struggle to grow one quarter to the next in this climate, currency devaluation is constant. The G20 is just starting to recognise a currency war is going on, while quantitative easing and debt monetization is pushing commodities up. Gold is just the best inflation hedge amongst commodities, that and being a monetary metal; central bank demand is contributing to rising prices (especially Russia/China). Gold became a tier one asset last year, so it's acceptable as collateral.
Granted commodities don't offer dividends, but as said this is a time where people are fighting to preserve their buying power rather than increase it. Of course people don't want to put all their eggs in one basket.
Azure
100% organic vegan hubbas
id really rather not invest. just save your money instead of buying a bunch of plastic banana bullshit for yourself. if you REALLY have to invest your money and have no market savvy, invest it generally rather than specifically, over a wide area of very different things so when the next inevitable economic trough comes along you dont waste your entire savings because you though X was a really hot idea at the time.
as far as people BUYING GOLD, that is some really silly shit. nobody accepts gold dust as payment anymore, and if the US Dollar goes into a massive crash, all of you idiots who bought gold will now have to trade it back into money that will be pretty worthless. its just a big fear tactic being used by what equate to financial carnie barkers so they can get in on some limited action. and if the world collapses, well, you cant EAT your gold can you? it will also be massively irradiated and will kill you if you touch it so enjoy that as well, idiot.
as far as people BUYING GOLD, that is some really silly shit. nobody accepts gold dust as payment anymore, and if the US Dollar goes into a massive crash, all of you idiots who bought gold will now have to trade it back into money that will be pretty worthless. its just a big fear tactic being used by what equate to financial carnie barkers so they can get in on some limited action. and if the world collapses, well, you cant EAT your gold can you? it will also be massively irradiated and will kill you if you touch it so enjoy that as well, idiot.
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ADF
Member
Savers are under attack at this time. The government are desperate to get this economy out of recession, and they believe the solution to that is more consumer spending. So ZIRP (zero interest rate policy) means you don't earn any interest on savings, which isn't just about making a return on savings but combating inflation. Throw currency expansion during a economic bust on top of that, and interest rates are effectively negative. Like a tax on savers to subsidise borrowers, savers are being punished for saving.
They're trying to bully people into spending their savings, the Bank of England actually came out at one point and admitted that. So being a saver is a lose lose situation in the long term.
I'm not sure where you got this idea from
Plus an apocalyptic scenario is hardly a valid criticism of gold, when in that scenario EVERYTHING is wiped out, including currencies and stocks.If a currency dies, everyone holding the currency gets wiped out. People who stored their buying power in other means; whether it be gold, property or something else are protected from the collapsed currency to an extent. They have a transitional storage of wealth which can be converted into a different/the next currency, like someone in Weimar Germany or Zimbabwe selling things in exchange for a currency not affected by the collapse. In the Zimbabwe hyperinflation those with gold had something they could use as a currency of last resort, those with Zimbabwe dollars starved.
But it isn't about the gold standard right now, no one is talking about that. It's about preserving buying power at a time of high inflation and other areas of traditional safety (savings, bonds/gilts, stocks) are unsafe. It's what will preserve your buying power the best during this trying period.
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