Investments 2014

One year ago I compared how two investment strategies fared in the years since the 2008 financial crisis: "Guns 'n' Gold" versus the stock market. The stock market won hands down in the period from January 2009 through December 2013. So how did these investment strategies work in 2014?

Guns: I use the Bushmaster "Patrolman's Carbine", a CAR-15 clone as my benchmark. One year ago these were selling for 800 bucks at the local Dunham's sporting goods chain. Today you can get them for $700. Guns didn't do well as an investment in 2014.

Gold: The London price fix for gold on January 2, 2014 was $1225/oz. It closed December 30 at $1206. I expected it to be trading at less than $1000, so it did much better than I expected, but it sure didn't make money for anyone who held it all year. (A few speculators probably made money off its wild price swings, but volatility isn't really something you look for in a long-term investment.) Of course at least part of gold's decline was due to the strong dollar; had the Euro not lost ground to the greenback gold might have done a little better. So call it a wash.

Stocks: The benchmark S&P 500 started 2014 at $1832. It closed the year out at $2059. That's a 12 percent gain for the year. Not as big as the previous five years, but a respectable gain nonetheless. Once again the stock market wins.

Shows why a person should DIVERSIFY and NOT put all your eggs in one basket. A mixture of stocks and bonds and precious metals invested OVER THE LONG RUN is my advice for an investment strategy. If you invest for the long haul and NOT put all your eggs in say stocks only or bonds only or cash or precious metals only and jump in and out of the market daily you spread your risk. Some years certain precious metals may do good other years stocks might and vice versa.

DIVERSIFY your portfolio!!! I have done quite well at times in precious metals myself but its tricky and risky to do so, I figure for the common man its best to diversify over the broad spectrum of investments, some stocks some bonds some cash some mutual funds some in precious metals.

HOWEVER TO EACH THEIR OWN if a person prefers stock or bonds or precious metals or guns or ammunition or commodities that's THEIR CHOICE none of ours. I always like to have at least some portion in precious metals myself, I remember what happened to stocks in 2008 grrrrrrrrr lol

Happy New Year

John T

The rest of the story is where are you in your life cycle?

If retired, you (I) can't afford the risk of the gamble. I can't wait for "the long haul". Reading what the market and all those things have done is hind sight and always 20-20 or better.

The future is yet to be determined and you know not what snake in the grass is out there to get you. Lots of people and things working to get your money.

As I said before, if you loose 50% of your holdings gambling and investments of any kind are just that, it takes a 100% gain just to replace what you lost and then start talking about some gain. Where you going to find a legitimate game to give you that kind of return in any kind of a reasonable time span?

So, since I am retired and do use some of what I stashed away, I put it in low yield, "no risk no gain" paper that supports my lifestyle and sleep comfortably at night. Name of the game is to not run out before your life does......is for me anyway.

My 2c,
Mark

JohnT
Sometime one has to learn how to turn the 2008 loss into a gain. I sold some stock in 2008, took a big loss, but that loss is used to off set any capital gains or my CPA takes $3k income each year. That translates into about a $1k annual tax savings.

I put the money back in to the market in Jan 2009. So I took advantage of my loss. INCOME TAX REALCOATION.

Short term investments that look good are building trust funds, paying 6.25-7% guaranteed plus a bonus.

Difference between a winning and losing strategy also comes down to what was actually converted to cash and how much gain was left after taxes. 2014 was the best year I ever had in the cattle business, all classes of cattle made money, and large percentage gains, but those profits would have been largely eaten up in taxes had I not spent that money and more on infrastructure and facility improvements on my places. I don't worry very much about my IRA and 401K accounts because as long as the world population continues to grow and there is not an actual recession/depression the stock market will gain at least modestly almost by default, timing when to get out of the market before retirement is what a person has to plan for. I have heard those paper profits are not very tasty between two slices of whole wheat.

LAA,
You are right about taxes. I just took out $12k and about $4k went to pay taxes. You also have to pay taxes on SS.

I talked to my investment adviser two weeks ago. After I got divorced in 06 I had 103k left in my 401k. Then it went down to about 55k by 08. It is now at 280k. Of course I have been adding 13% of my income to it. My mutual fund, that he has me in is making 6%. I wish it was making more than that, but that is how diversification works. SLOW and STEADY wins the race.

Buy low and sell high. Gold has always been high in my opinion and so I never bought any, but the same can be said for land. OH, how I wish I had bought some 20 years ago.
SDE

Just remember that "Every dog has it's day". The market will change at some point.

Mark, FYI I've got about three years to go before I retire. My 401k is about 70 percent in stocks, with most of the remainder in medium-term bonds. A bit aggressive, and I am slowly easing out of stocks.

You say you can't accept the risk of putting money in stocks, but can you afford not to? If you're in your sixties you'd better plan on your money holding out AT LEAST another twenty years. And if inflation returns it could take out a big chunk of your nest egg.

The problem with investing in bonds these days is that interest rates are near zero. When interest rates go up (which is the only direction they CAN go), bond prices will tumble. Your "no risk" investments will turn out to be very risky indeed.

With regards to losing 50 percent of your investment if the market takes a dive, I think you're looking at it wrong. When the market drops, you're not losing money, per se, as long as you don't cash in. After the market dived in 2008, a lot of discouraged investors took their money out of stocks. That turned out to be a bad idea, as they missed out on one of the biggest and longest bull markets in history. Those who kept their stocks got their money back and then some. And for those who moved everything they had into stocks, they made a killing. A drop in the market can be a risk or an opportunity, depending on how you look at it.

All the standard disclaimers apply: Past returns are not an indication of future performance, blah, blah, blah... Good luck in '05.

See the problem with giving your $$ to a financial institution is this . Once they have it, the chances of getting it ALL back are slim , if you earn a little gain, that's great . But if you think old school and keep the cash at home , invest in your self and by iron at low cost with no tittle for a paperwork trail then repair it and sell it for a profit -- Humm just like the stockmarket -- right . An old fellow told me that years ago and it worked for him and today he's rolling in $$$

The argument for gold and guns is not to make money short term. The argument for gold and guns is which would you rather have when paper investments disappear into thin air. When the dollar becomes worthless, those with the guns will have the gold.

Don't hold your breath about the dollar becoming worthless. I have been hearing that kind of talk for at least the last 40 years, and it hasn't happened yet. I have also heard the BS about there not being any SS money left for at least the last 50 years - but the government still sends out the checks every month. Even got a raise.

It does get tiresome hearing all of the "doom and gloom" about how the dollar is failing (it is NOT), and how the country is going down the tubes (NOT), as well as the rest of the doom and gloom stories circulating.

This is STILL THE BEST PLACE IN THE WORLD TO LIVE!!! whether you believe it or not, like it or not!!!

Mark you must be a stock retailer. Doesn't matter if your loss is paper or actual. It's still the loss and you still have to recover 100% to get back to where you were. The only difference in paper and actual is WHEN you cash in. It could be tomorrow. So don't blow that smoke up my...................

You play with your money. It's yours. I was 20 years ahead of you playing this game of chance and I have walked the walk.

Good luck.........sucker?

Mark

Ever hear of Howard Ruff? He was predicting the collapse of the dollar and the US economy back in the seventies. Guess what: it didn't happen. Of course, even a broken clock is right twice a day, and the US did come close to the edge in 2008. Funny thing, though, the crisis looked nothing at all like Howie predicted. Inflation (the major economic problem of the seventies) was not the cause of the crisis. The dollar remained strong, and the country never disintegrated into a barter economy. Who know? It could happen like Ruff predicted some day. But I wouldn't hold my breath.

Dick, in the case of gold, it already HAD its day, and that day was September 6, 2011.

Year in, year out, a good long term investment= Farmland.

Gene

(quoted from post at 11:49:16 01/01/15) The argument for gold and guns is not to make money short term. The argument for gold and guns is which would you rather have when paper investments disappear into thin air. When the dollar becomes worthless, those with the guns will have the gold.

Click to expand...

Ya but the problem is, some people are too stupid to figure that out. Compairing apples to oranges never works out, just like this. Heck, if I wanted to be stupid, I could go on and on about how hammers are 10 cents cheaper now that at the beggening of the year, therefore nobody should have bought hammers this year. See how that works? Stupid, aint it. Thats the compairison of saying guns are cheaper this year than last, therefore, they are a "bad investment". Ya need a gun, buy a gun, it could save your life after all and last I checked, that trumps any other "investment".

In any case, I do understand gold and guns as well as other investments. I made 10% on gold this year just to prove a point. Earlier this year, a typical naysayer said sell gold its going to crash so I bought the next morning and within a week, it went UP 4%. I listed on craigslist for a nice premium and ended up with 10% in under 2 weeks. Why? Because the guy is an idiot and I wanted to see what would happen when I put my wallet where his mouth was. Could I do that all year or every week of the year? No but neither can anyone else with stocks. But the fact is, smart people dont invest in ONLY gold, they already own tons of stocks and want gold ALSO. While Im not a gold bug, I can understand why they are buying it. Heck, just ask some of the jews 75 years ago what good gold was... or diamonds. A crazy guy with a funny schnurrbart killed about 6 million people. I wonder how many he would have gotten if THEY listened to the naysayers that said "dont own gold, put it in a business, what could go wrong?" Think about it.

Anyway, making silly comparisons between investments and "investments" really dont work. Im not on a crusade to change anybodys mind, put your money where you want it. If you want stocks, buy stocks. If you want bullets, buy bullets. If you want gold, buy gold. But dont try to BS me into thinking you understand any of them when you cant even compair them accurately. That dog just dont hunt....

Oh and the rest of the story about your portfolio being reduced to 50% and attempting to restore it is this. Assuming you are diversified in the market and the market makes 10% for the year. Great. You just made 5% for the year which compounded over the years adds up to a big loss to add to your already big loss.

Naw. I don't want nor need a so called financial analyst. I do the best job of taking care of MY money. I have the most vested interest in it and keeping it in MY pocket.

Mark

Yeah and it is easy to invest in a mutual fund that imitates (beta of 1) the S&P 500. Pretty much the only year gold or guns would win would be during a heavy recession.