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To thrive with gold you must time - both in and out - near perfectly, or be content with long periods of losing results. It goes sideways and down for very long periods, then skyrockets and then again disappoints. Not for me.
i would never buy gold stocks either as they are still stocks and behave like stocks . but gold bullion etf's are a different story . you just buy them and rebalance with your portfolio and done , they are 100% gold holdings and not subject to earnings , strikes , etc like gold stocks are . clearly holding the gold through good and bad times has done better over a full cycle , than just equities and bonds even though gold spends most of it's time sleeping or down .
stocks do not do as well when you rebalance because they are up more than they are down by more than 2x , as well as you rebalance usually in to bonds which do not have the ability to equal stocks gain when it is their day i the sun . .
gold does nothing or is cheaper for longer periods of time but when it moves it can be as powerful as equities are .
so you can really reduce your costs over time and then the run ups are usually very powerful .
without rebalancing it would not work well .
you can see the very powerful moves last time stocks were down .
2008 gld up 4.50%
2009 -gld up 24%
2010 gld up 30%
2011 --gld 9.57
2012 gld 6.60
Yes gold had big increases after 2008. If you look at that it is possible to conclude that gold is a hedge against a future drop in the markets. Unfortunately that logic is thin, thin, thin. Gold has been pretty flat for other market drops including 2000. Aside from after 2008, the last surge was in the late 1970s and that was not related to the stock market.
stocks do not do as well when you rebalance because they are up more than they are down by more than 2x , as well as you rebalance usually in to bonds which do not have the ability to equal stocks gain when it is their day i the sun . .
gold does nothing or is cheaper for longer periods of time but when it moves it can be as powerful as equities are .
so you can really reduce your costs over time and then the run ups are usually very powerful .
without rebalancing it would not work well .
you can see the very powerful moves last time stocks were down .
2008 gld up 4.50%
2009 -gld up 24%
2010 gld up 30%
2011 --gld 9.57
2012 gld 6.60
Right if your timing is impeccable you'd be able to make some gains, just like any other sector...
For example, did you load up on US tech stocks in the early and mid-1990s? Then, did you short tech in March 2000?
Did you short global stocks in 2001, then buy them back in March 2003 and hold them through 2007?
Did you buy oil, another commodity, in January 2007, right before its last steep surge, and sell in July 2008?
Did you buy emerging market stocks in Autumn 2008? Or developed country stocks in early 2009, when sentiment was black? Did you sell the euro and buy dollars in April 2008, then reverse that in March 2009?
If you didn't time those right - pretty big, significant swings - what makes you think you can get in and out of gold right?
Amazingly, many normal people - who never, ever would think they could time the stock market, bond market, pork bellies or currencies - are content to own gold thinking it is 'safe'. To them I say it's just a commodity, volatile like any other. There is nothing golden about gold.
Right if your timing is impeccable you'd be able to make some gains, just like any other sector...
For example, did you load up on US tech stocks in the early and mid-1990s? Then, did you short tech in March 2000?
Did you short global stocks in 2001, then buy them back in March 2003 and hold them through 2007?
Did you buy oil, another commodity, in January 2007, right before its last steep surge, and sell in July 2008?
Did you buy emerging market stocks in Autumn 2008? Or developed country stocks in early 2009, when sentiment was black? Did you sell the euro and buy dollars in April 2008, then reverse that in March 2009?
If you didn't time those right - pretty big, significant swings - what makes you think you can get in and out of gold right?
Amazingly, many normal people - who never, ever would think they could time the stock market, bond market, pork bellies or currencies - are content to own gold thinking it is 'safe'. To them I say it's just a commodity, volatile like any other. There is nothing golden about gold.
You're talking about market timing. That's not the same thing as rebalancing.
I guess Mathjak moved on, but in all fairness, I believe Mathjak is promoting rebalancing using the golden butterfly or similar portfolios with a 20-30% allocations of gold and TLT. The theory is those holdings should offset any major drops in the stock market. Certainly looking back at 2008 that would have been a great strategy. Unfortunately that strategy would not have worked well in the past 5 years. In addition to the long wait for any potential benefit, it does not seem that historically gold did well with market crashes. 2008 may have been more the exception.
Unfortunately that strategy would not have worked well in the past 5 years. In addition to the long wait for any potential benefit, it does not seem that historically gold did well with market crashes. 2008 may have been more the exception.
I think 5 years is too small of a time period to compare the performance of any portfolio, especially when those 5 years have been a bull market. Otherwise, the conclusion is that everyone should be in 100% equity, 100% of the time.
Personally, I think a period that includes multiple bull and bear markets would be more informative. I like 30-year comparisons, since it aligns with mortgage lengths.
Agreed, but using 2000 or 2008 may also be misleading
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