Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Haim R. Branisteanu who wrote (71955)	1/3/2010 6:56:01 AM
From: KyrosL	3 Recommendations Read Replies (2) of 74559

Haim, one other thing TJ consistently "forgets" in his comparisons of gold vs other investments such as stocks, is the stock dividends. An investment in a stock index such as SP500 with the dividends reinvested every year, yields a multiple of the final index price over the decades that TJ likes to use as a comparison basis. Using simply the index price without dividends is totally bogus. Most of an average stock's performance over many years is provided by dividends. A 4% dividend increases the performance of a stock over 30 years by 320%, assuming the stock remains unchanged. If the stock price increases even modestly over time, the compounding effect of dividends works even more dramatically. Of course, TJ does not have that much of his net worth in gold on the average, as his posts suggest. He is not following his own "getgold" advice -- wisely so. On the average, TJ holds a lot more in real estate, cash, and even stocks. On the rare occasions when gold gets to be more than 25% of his portfolio, it is only for short term trading reasons.

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