09/20/10 Baltimore, Maryland – Whew…what a week….! We had a bad cold last week, but we had to keep going.
Half the world’s work is done by people who don’t feel very good, so we soldiered on… We were very busy.
We don’t approve of busy-ness. People who are very busy are usually wasting their time. Or, they are wasting your time. Politicians, for example. They’re on the go day and night – especially at election time. Shaking hands. Appearing at rallies and town hall meetings. Giving interviews. Meeting the voters. Meeting with their staff. Go…go…go… gone!
We would all be better off if they stopped…and thought. A little reflection might help us all.
That’s true of people in business too. Busy-ness feels productive. It feels effective. It looks dynamic and hard-working. But without solid thinking behind it, it is as empty as a whirlwind.
But what are we talking about? What’s this got to do with money?
Well, not much. So let’s move on.
What happened on Friday? Not much. Nothing worth comment.
Gold and stocks both up a little. But so what?
Should you buy stocks? Definitely not. Well, not definitely not. Maybe not. US stocks are likely to underperform over the next 10 years. As we keep saying, they still haven’t yet fulfilled their rendezvous with bear market destiny. When that happens, stock market investors will wish they had their money somewhere else.
Probably the only exceptions are those who take a very, very long-term outlook. Right now, there are some good US companies available at reasonable prices. Altria. Johnson & Johnson. Diamond Offshore Drilling. Today’s price is probably NOT the best price you will ever get. But maybe you don’t care. If you take a long enough perspective, you could be very happy with the kind of returns these companies are likely to deliver. They pay good dividends – and they’re growing. Many US companies are not only US companies. They’re world leaders. With brands that are known all over the globe. Many of these companies are enjoying spectacular growth in their foreign sales.
So, if you’re willing to look far enough into the future…maybe some of these US brand-name companies are worth buying.
Well, what about gold? While US stocks have gone nowhere since 1998, gold has gone up every year. This year it’s up again – 15%. And last week, gold hit record highs on three days.
So, should you buy gold? Again, it depends on what you’re trying to do. Here at The Daily Reckoning, we don’t encourage speculation. So if you buy gold in the hope of making a lot of money, you’re on your own. We don’t recommend it. Gold could go up…or down.
But gold is money. It’s the world’s more reliable money. You could use it to buy stuff during the reign of Caesar Augustus. You can use it to buy stuff now (after converting to paper currency). What’s more, you get about as much stuff per ounce (relatively) now as you did 2,000 years ago.
If you want to save money, save gold. It might go up. It might go down. But it won’t go away.
Bill Bonner
for The Daily Reckoning
Bill Bonner
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010.
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Hey Bill,, The recessins over!!!!! HORAY!!
“You could use it to buy stuff during the reign of Caesar Augustus.” Yea we know what happened to Rome. Gold, Fiat money, sea shells. It all goes to hell eventually.
It will go away when the government seizes it from you.
Bill you say:
What’s more, you get about as much stuff per ounce (relatively) now as you did 2,000 years ago.
Hmm, very intriguing if true. You have mentioned it before. You probably gave the source but I don’t recall it.
Probably the source tracks the price of gold through the ages and inflation. Possibly too it tracks the total GDP of the world and the total amount of gold available.
It’s interesting to think about the implications of this claim.
I am pretty sure the GDP of the world in real terms is up thousands of fold in the last 2000 years. Huge population growth and huge increase in output per person due to technology.
How about gold, is the quantity available up the same 1000s of fold? Would it not have to be if an ounce of Gold buys the same suit today as it did 2000 years ago?
If Gold were finite and was the only real money then if GDP rose and rose then I think the value of Gold in real terms would soar and soar. But in that cse each ounce was buying more and more…
So how does it work? When GDP rises rapidly, what happens to the price of gold?
Do tell?
And don’t be afraid to get busy and use some facts. I mean your words and arguments are great, but a point like this needs facts to prove it.
Everything in this article seems quite agreeable, but when I pluck it with my finger, why does it sound hollow?
As a stock investor if you talk about dividend return you are probably out … out of date. Generally, how many companies on earth generate handsome dividends? Normally price earning ratio is far far out. Ya, you may earn some dividend, then, the ‘speculative factor – fall in capital’ most probably wipe out your dividend gain. High yield stock may bear exceedingly high premium. In this financial high sea, investor normally gamble or take high risk in speculation.
How many millionaires grown out of the dividend rewards – chicken feed?
In this free printing press era, gold is supreme. Initially, large fund from the printing press may be channelled to the stock market. When limit is hit, saturation sounds, this paper money will go crazy on gold.