***Official*** 2011 Stock Market Thread

[PeeluckyDuckee]

Prices are very elastic in the market, news good or bad can really move things up or down. I would buy beat down equities over gold.

 

[LordNoob]

What do you all think of PDLI (PDL Biopharma)? It has a great dividend but it looks risky in the longer term due to patents expiring in a few years and whatnot. Thoughts?

 

[manly]

Q: is it time to get back into equities?

Keep the powder dry, but I wouldn't rush back in.

NYTimes - On Wall Street, a Surprising Group of Bulls

Q2 GDP is about to be downward revised & Bernanke is unlikely to announce QE3 otherwise Rick Perry will form a lynch mob to find him. Housing starts announcement tomorrow can't be good?

In short, current prices are cheap only if profit growth continues and that's unlikely with GDP growth down to 1% for the foreseeable future. But at least this isn't Southern Europe.

 

[bamacre]

The vast majority of people don't "get" gold, so maybe I can help those willing to listen.

People have been buying gold because economies are in the shitter and currencies are going to be devalued in attempt to help. Many of those buying gold believe that devaluing the currencies, in the long run, will only cause MORE trouble. The past 40 years or so has really been the only time in the history of civilization that basically all currencies are fiat, or at least not backed by gold (or silver) in any way. Gold has long been money, I own gold coins from countries all over the globe, from the 1800's up. Denmark, Austria, Australia, Singapore, GB, USA, South African, Iran, etc.

For a while, a lot of countries used the design and specifications of the Great Britain Sovereign gold coin to make trade easier between those countries. In addition to the GB Sovereign, Australia had a Sovereign, South Africa a "2 Rand," Columbia 5 Peso, even Iran had a Pahlavi and an Azadi, all of these coins contained exactly .2354 ounces of gold. There were fractional versions, the half Sovereign, half Pahlavi, 1 Rand, etc. And there were several silver coins and gold coins with other weights of gold (including Mexico, USA, France, etc) as well. Bottom line, there is a strong history of gold being money, and even today, central banks across the globe hold gold along with other reserves of currencies. The difference with gold is, it cannot be created out of thin air. It is not a liability, the money in your wallet is a liability. The USD is created with new debt. You can research that more yourself.

Frankly, the world has made more promises, or liabilities, than can possibly be kept. In a world which has been run by Keynes' ideas, his credibility is slipping. The USD as a world reserve currency is not working, and smart folks see the USD losing that status. Gonna suck for the US when that happens, it's gonna suck for everyone when that happens, but in the longer run, other nations should benefit from being unchained from the dollar. But what's next? What will replace the dollar as a reserve currency? A global currency, a few regional currencies? And how will they be designed, will they be backed by anything? How elastic will it or they be? While the world tries to answer those questions, gold will continue to be a safe haven, not just from failed currencies, but from a terrible global economy caused by those failed currencies.

When will the gold bubble burst? Not any time soon. The gold bubble, if you want to call it that, will burst when real interest rates are positive, when we have financial and monetary systems that have regained trust, and the dust has settled from bad economies. You see, gold is not a bubble, not yet, but the reaction to a much bigger bubble bursting. And if you believe gold is a bubble, then I recommend you look at the environment in which the gold bubble popped in the '80s. I recommend you look at the Fed policies under Paul Volcker and compare those to Benny Bernanke's. And what if Bernanke attempted to implement Volcker-style policies, what if Bernanke did raise interest rates to, let's say 5%? What would that do to our economy, and what would that do to our federal budgets? Answer those questions, and understand what exactly gold is, and you'll begin to understand why gold has risen in demand, and why people like me laugh when I see people with zero understanding of the big picture and simply say "gold is a bubble."

 

[SP33Demon]

Prices are very elastic in the market, news good or bad can really move things up or down. I would buy beat down equities over gold.

Right now it's hard to say what the 2K level perception will be like. Gold has outperformed most stocks in the past year so I'd bet it will continue to do that until a couple quarters of great economic news. Until then, it's a surefire bet. I'd say that beaten down equities such as the energy sector would be good buys on lows as well. Position yourself in both and the fall is mitigated. Diversification yada yada yada.

 

[IHateMyJob2004]

What do you all think of PDLI (PDL Biopharma)? It has a great dividend but it looks risky in the longer term due to patents expiring in a few years and whatnot. Thoughts?

I've had an eye on it for a while. FWIW: Seth Klarman holds it.

I haven't bought it and I don't think I ever will. To many other opportunities out there right now.

 

[IHateMyJob2004]

bamacre,

If not the US dollar, what will replace it?

Going off fiat currency is a stupid idea. Anyone that thinks this will ever happen is a fool.

When people start trying to convince others that there is a paradigm shift or that the "old rules don't apply", there is a bubble.

People are buying gold for no real good reason. They are what history will call bag holders.

 

[RbSX]

I've had an eye on it for a while. FWIW: Seth Klarman holds it.

I haven't bought it and I don't think I ever will. To many other opportunities out there right now.

Heh, let's talk about that on Friday.

 

[bamacre]

When people start trying to convince others that there is a paradigm shift or that the "old rules don't apply", there is a bubble.

Look you momo, that's exactly what you're trying to tell me, that the "old rules don't apply." People buying gold are the ones abiding by the "old rules," or "tradition" as Bernanke would call it.

People are buying gold for no real good reason. They are what history will call bag holders.

I'd say this is true for treasury holders, not gold owners.

Meh, you can lead a horse to water...

 

[IHateMyJob2004]

Meh, you can lead a horse to water...

Keyne's credibility is slipping? How so?

The people that think Keynes is lacking in credibility are morons. First link in Google:
http://dscoffins.blog.com/2011/07/20/dont-be-deceived-by-keynes/

Why gold? Why not Coconuts?

 

[bamacre]

Keyne's credibility is slipping? How so?

The people that think Keynes is lacking in credibility are morons. First link in Google:
http://dscoffins.blog.com/2011/07/20/dont-be-deceived-by-keynes/

If your research consists of clicking on the first link google gives you (and who knows what exactly you searched for), I cannot help you.

Why gold? Why not Coconuts?

Coconuts spoil. They are also way too big considering their value. Seriously?

http://www.youtube.com/watch?v=r-o79vfBDJ4

http://www.youtube.com/watch?v=jj8rMwdQf6k

 

[IHateMyJob2004]

If your research consists of clicking on the first link google gives you (and who knows what exactly you searched for), I cannot help you.



Coconuts spoil. They are also way too big considering their value. Seriously?

http://www.youtube.com/watch?v=r-o79vfBDJ4

http://www.youtube.com/watch?v=jj8rMwdQf6k

I get it. Anyone that disagrees with you can not be helped. You've said enough.

As for coconuts, if we are going to use something arbitrary as an intermediary, why gold? Why not copper or steel or clam shells? Want to be rich, dig up gold. Want to be rich, become a clam fisherman. It's moronic. How does one control inflation or inject stimulus into the economy without fiat currency? Fiat currency has to many benefits that gold does not. Now, if not the US dollar, what is the alternative? There is not one.

Anyway, I enjoyed my last debate on these forums. Here, I'll low ball you back. I cannot help you.

 

[bamacre]

I can't help you, because you haven't read what I've written. I've already answered questions you are now asking again. I'm not going to bother anymore. I may perhaps bump this thread in a couple of years and show you your own stupidity. I've already got one thread ready to bump as soon as gold hits $2k, which will probably happen before the year's end.

 

[LordNoob]

So in terms of equities only, what is everyone buying or looking to buy these days?

Edit: If you are even buying anything, of course.

 

[IHateMyJob2004]

last thing I bought was USG. At today's prices, it is an easy double within a few years.

 

[IHateMyJob2004]

I can't help you, because you haven't read what I've written. I've already answered questions you are now asking again. I'm not going to bother anymore. I may perhaps bump this thread in a couple of years and show you your own stupidity. I've already got one thread ready to bump as soon as gold hits $2k, which will probably happen before the year's end.

Gold down 2% today ..... good luck.

Regarding gold, you defintely have an opinion. I'll give you that. You bascially posted a bunch of historical facts. Then throw out vagueosities like "smart folks see the USD losing that status." Smart people like Warren Buffet or like you?

Can I ask? If we went back on the gold standard, what tools would world goverments have to deal with the financial issues of the past 2-3 years? Oh sorry, you probably answered that already.

 

[darkewaffle]

I can't help you, because you haven't read what I've written. I've already answered questions you are now asking again. I'm not going to bother anymore. I may perhaps bump this thread in a couple of years and show you your own stupidity. I've already got one thread ready to bump as soon as gold hits $2k, which will probably happen before the year's end.

What's the point in that though? Nobody is arguing that you can't make money off of it or that the price hasn't gone up, that's already been made clear; even if it had nothing else going for it right now it can ride it's own hype up over $2k easily.

What's subject to argument is whether it can keep it up and whether it will stay up, which I think it simply can't, and why it's up. The price of gold over the last 30 days alone has risen about 16%, find a stock that rises like that, a business that sells like that, hell even a weight lifter that increases gains like that and I doubt you'd find anyone who would call it a sustainable rate of growth.

Gold is riding it's own wave and it's amplified by the economy and the proliferation of the "Cash4Gold" type businesses. In this economy, people feel unsure. They look at gold as a constant store of value, which in our own human history at least makes sense. Something that through good times and bad has been valuable, so people feel secure in it.

I think that effect is enhanced by Cash4Gold and other such enterprises; these businesses have made gold 'accessible' because trading gold is no longer the business of men in monocles and cloth gloves weighing a solid gold bar; anyone can participate which, again, people feel comfortable in. Cash4Gold specifically with it's commercials and widespread advertising have legitimized this "laymans" gold trade. People feel like if they invest in gold they both have an investment and an emergency fund.

Further people have always been drawn to gold because it's simply easier for them to understand than a stock or a bond. On the most literal level, what you own through a stock is nothing more than a piece of paper which is, frankly, confusing for many folks and they'd feel more secure with a tangible good for their money.

Point being I think there's reasons for the gold run up, I think it's going up because it's in a good position right now. I don't think it's inherently or intrinsically more worthwhile, only relatively, so I would say it won't be lasting. But it will probably last until confidence levels in the economy rise. Whether that happens or not is arguable, I think inevitably it will turn around and people's priorities will shift from security to reward.

 

[bamacre]

What's the point in that though? Nobody is arguing that you can't make money off of it or that the price hasn't gone up, that's already been made clear; even if it had nothing else going for it right now it can ride it's own hype up over $2k easily.

What's subject to argument is whether it can keep it up and whether it will stay up, which I think it simply can't, and why it's up. The price of gold over the last 30 days alone has risen about 16%, find a stock that rises like that, a business that sells like that, hell even a weight lifter that increases gains like that and I doubt you'd find anyone who would call it a sustainable rate of growth.

Gold is riding it's own wave and it's amplified by the economy and the proliferation of the "Cash4Gold" type businesses. In this economy, people feel unsure. They look at gold as a constant store of value, which in our own human history at least makes sense. Something that through good times and bad has been valuable, so people feel secure in it.

I think that effect is enhanced by Cash4Gold and other such enterprises; these businesses have made gold 'accessible' because trading gold is no longer the business of men in monocles and cloth gloves weighing a solid gold bar; anyone can participate which, again, people feel comfortable in. Cash4Gold specifically with it's commercials and widespread advertising have legitimized this "laymans" gold trade. People feel like if they invest in gold they both have an investment and an emergency fund.

Further people have always been drawn to gold because it's simply easier for them to understand than a stock or a bond. On the most literal level, what you own through a stock is nothing more than a piece of paper which is, frankly, confusing for many folks and they'd feel more secure with a tangible good for their money.

Point being I think there's reasons for the gold run up, I think it's going up because it's in a good position right now. I don't think it's inherently or intrinsically more worthwhile, only relatively, so I would say it won't be lasting. But it will probably last until confidence levels in the economy rise. Whether that happens or not is arguable, I think inevitably it will turn around and people's priorities will shift from security to reward.

First off, pretty good post.

It certainly was not your intention, but you're making a few straw man arguments, and you may wish to read up above a bit and see the actual comments ("gold is a bubble" and "gold is going up for no reason") to which I was replying. I was only trying to be informative, and like they say, no good dead goes unpunished.

You also made some arguments that I was making above, i.e., when people would exit safety and go back into riskier assets, gold would fall.

What I was NOT doing was suggesting we go back to a gold standard, which would be impossible at this time anyway, as some idiot suggested (not you, I forgot his name, dude who doesn't like his place of employment).

 

[IHateMyJob2004]

nevermind ... waste of time.

Good luck on $2K gold.

 

[IHateMyJob2004]

Further people have always been drawn to gold because it's simply easier for them to understand than a stock or a bond. On the most literal level, what you own through a stock is nothing more than a piece of paper which is, frankly, confusing for many folks and they'd feel more secure with a tangible good for their money.

I'd argue that most people know as little about gold as the stock market.

Gold is comprised of a 50'x50'x50' solid cube. A little shaving off that block is worth $1900 today for some reason. Not many people comprehend that.

 

[LordNoob]

So obviously with the numbers coming out today, homebuilders are taking a hit, but what do you all think about snapping up some of the potential bargains in homebuilders/residential development that might have been oversold following today's news?

 

[IHateMyJob2004]

First off, pretty good post.

It certainly was not your intention, but you're making a few straw man arguments, and you may wish to read up above a bit and see the actual comments ("gold is a bubble" and "gold is going up for no reason") to which I was replying. I was only trying to be informative, and like they say, no good dead goes unpunished.

You also made some arguments that I was making above, i.e., when people would exit safety and go back into riskier assets, gold would fall.

What I was NOT doing was suggesting we go back to a gold standard, which would be impossible at this time anyway, as some idiot suggested (not you, I forgot his name, dude who doesn't like his place of employment).

One paragraph dedicated to the history of the gold standard.

one paragraph saying that the US dollar is a failure. Even attacking Keynes?

"The USD as a world reserve currency is not working, and smart folks see the USD losing that status. Gonna suck for the US when that happens, it's gonna suck for everyone when that happens, but in the longer run, other nations should benefit from being unchained from the dollar. But what's next? What will replace the dollar as a reserve currency? A global currency, a few regional currencies? And how will they be designed, will they be backed by anything? How elastic will it or they be?"

Sorry for my confusion. You clearly were not implying anything.

Ya, I'm the idiot. Good luck.

Can I ask. What happens if Friday's comments are good and gold tanks? Does that make you the idiot?

Originally posted by: LegendKiller
this bailout will prove to be a boon for the world.

Good to see we agree on something. Or do you think Legend Killer is wrong?

Got bored. Read some of your comments here:
"Would you support a one world currency/bank?"
I give up. .... EIDT: Oh god, you're one of those people that mix some facts and your thoughts into a post and claim victory. Then tell the other perosn they are idiots without really supporting anything you say. Had enough. Good luck. Gold will go up for the sake of going up till it stops going up. Gotcha. Well played!

 

[IHateMyJob2004]

bam,

Price follows value. If you landed on Earth and knew everything about gold that you could know without knowing it's current market price, what would you pay for it in order to feal like you got a fair price?
Get it? (Here comes the post about me clearly not knowing what I am talking about. Maybe a personal insult. All while claiming victory. Am I predicting to much?)

 

[MayorOfAmerica]

IHMJ,

I lurk this thread... While I don't disagree with your methods of investing (sometimes I disagree with your assumptions and conclusions and how you arrived at them, but not always), you've got an almost cult-like fervor toward Warren Buffett (mentioned in every other post it seems) and value investing in general. Let me re-iterate that I am a value investor myself, but I don't think pontificating from your soapbox and holding court in this thread is going to help anyone. Acting holier-than-thou and preaching the "one-true-way" and waging war against the heretics is going to turn people away from what your underlying message about intrinsic value, what it means, and why price follows value. In other words, your approach to educating others and, at the very least, making your point, is all wrong.

I know its a god given right to act like a self-important jackass on the int4rpr0nz, but please dont exercise that right with everyone who comes into this thread with a different opinion than you. PliableMoose takes a different approach than a value investor, and it has worked for him (her?). From the results he posted, it looks to be more than luck, as it was sustained over a period of time. Value Investing is not the "one-true-way". Bamacre invests in gold. I don't understand gold, so I dont invest in it. It doesnt make everyone else wrong. I understand IV and free cash flow, it works for me. It doesnt mean its the only thing that will work for everyone else.

Lets keep a healthy discussion on diverse investing methods going in here instead of just prosecuting heretics. You might learn something, IHMJ ... Then again, good cult members can rarely be reprogrammed.

 

[IHateMyJob2004]

hi Joe