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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: ballsschweaty who wrote (67697)8/16/2007 2:37:24 PM
From: pogohere  Read Replies (1) of 116555
 
Homestake Mining 1929-1935 may be a good example for what to expect if the bust becomes severe. what did the stock do? it got a huge haircut in the actual 1929 crash along with the rest of the market (it fell from $80 to $55 or so, roughly a 30% whack), but then proceeded to rise nearly 10-fold over the next 6 years. during that time it paid out more in dividends that the stock would have cost at the '29 low. in fact, the 1935 dividend alone was $56/share (with the stock trading at about $500). HM's EPS growth from '29-'35 was 41% compounded annually.

note that this was achieved with a fixed gold price (which was raised once, in '34 from the previous $20.67 to $35 oz.) - the reason is that although fixed, the gold price rose sharply in real terms. falling input costs did the trick.
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