Debt-deflation Bear Market Update - Part I: First Bounce officially over - Eric Janszen

[bart]

Re: Debt-deflation Bear Market Update - Part I: First Bounce officially over (really)

hmmm according to your graph stocks are cheap to fairly valued

Indeed, especially on the CPI w/o lies one.


But there's always:
"The market can stay irrational longer than you can stay solvent."
-- John Maynard Keynes

And of course the hard asset and KaPoom cycles... and that the Dow was under the trend line from about 1975-1996. ;-)

[Ben]

Re: Debt-deflation Bear Market Update - Part I: First Bounce officially over (really)

thanks! - interesting as always

[Ben]

Re: Debt-deflation Bear Market Update - Part I: First Bounce officially over (really)

hmmm according to your graph stocks are cheap to fairly valued

[Chris Coles]

Re: Debt-deflation Bear Market Update - Part I: First Bounce officially over (really)

Do you have a link where Cameron is talking about the gold standard?

Ben

No. And having looked for it I have come to realise that he was not talking about a Gold standard for money, he was talking about a Gold Standard for dealing with the debt issue. So apologies everyone, I misheard what he had said.

This is the link to the interview
http://news.bbc.co.uk/today/hi/today...00/8708021.stm

[bart]

Re: Debt-deflation Bear Market Update - Part I: First Bounce officially over (really)

the lesson is that since the usa defaulted on gold debts in 1971, ALL of the theoretical 'gains' in stocks = inflation.

Not quite. When dividends are included, they're up.






Here's gold, in linear:




... and log based:

[Munger]

Re: Debt-deflation Bear Market Update - Part I: First Bounce officially over (really)

Not sure -- I tend to be suspicious of anything I find on the internet, so I wouldn't draw any hard conclusions from this. But it seems fairly legit upon quick inspection.

[raja]

Re: Debt-deflation Bear Market Update - Part I: First Bounce officially over (really)

was that the question? better... not bulletproof...

When I said "bulletproof", I was being polite . . . .

[metalman]

Re: Debt-deflation Bear Market Update - Part I: First Bounce officially over (really)

I dunno -- this tool says 100% S&P500 from Jan 1, 1973 to today would be annualized 9.73% nominal returns -- with dividends reinvested.

cool tool, munger. does it adjust for survivor bias?

[Munger]

Re: Debt-deflation Bear Market Update - Part I: First Bounce officially over (really)

I dunno -- this tool says 100% S&P500 from Jan 1, 1973 to today would be annualized 9.73% nominal returns -- with dividends reinvested.

[metalman]

Re: Debt-deflation Bear Market Update - Part I: First Bounce officially over (really)

But EJ, look again at your own post. The price stays the same 1944, 1945, 1946, year on year. Now I hear that David Cameron is talking about a return to a Gold Standard here in the UK. What your father paid is surely not what they will be worth in today's money AMOUNT, but will, surely, when all is said and done; be worth the same VALUE?

That the real lesson is; that to hold Gold removes the potential for loss of VALUE.

i gotta coupla those... the are bullion coins... commemorative... the dates of the above are 1921-1944, 1921-1945, 1921-1946. all the those i have are 1921-1947. 50 pesos never bought an oz of gold.

the lesson is that since the usa defaulted on gold debts in 1971, ALL of the theoretical 'gains' in stocks = inflation.

[metalman]

Re: Debt-deflation Bear Market Update - Part I: First Bounce officially over (really)

if his dad went full jtabeb & put 100% of $100k into 50 peso gold in 1973, he'd have $1.9m today vs $1.5m if in s&p500.

[Munger]

Re: Debt-deflation Bear Market Update - Part I: First Bounce officially over (really)

That represents a compound annual growth rate of 8% over 37 years.

Looking for an investment that has done better. What do you have for me?

Umm ... Stocks and Bonds with dividends reinvested?


http://www.econlib.org/library/Enc/StockMarket.html

I couldn't find data up through 2010, but from my scientific "eye balling" method I am guessing that the drop in stocks and rise in gold since 2001 has not made up the difference (bond returns were just slightly higher than gold from 1930s to 2001, stock returns were ~100x higher).

EDIT: Sorry EJ -- I misread your post, I thought you had written 1937, where it said 1973. Of course you are correct since then.

[Ben]

Re: Debt-deflation Bear Market Update - Part I: First Bounce officially over (really)

Do you have a link where Cameron is talking about the gold standard?

Ben

[Chris Coles]

Re: Debt-deflation Bear Market Update - Part I: First Bounce officially over (really)

This is a scan of three of many 50 peso gold coins I inherited from my father when he passed away in 1991. He paid $79 in 1973.

Today the price is $1500.

That represents a compound annual growth rate of 8% over 37 years.

Looking for an investment that has done better. What do you have for me?

But EJ, look again at your own post. The price stays the same 1944, 1945, 1946, year on year. Now I hear that David Cameron is talking about a return to a Gold Standard here in the UK. What your father paid is surely not what they will be worth in today's money AMOUNT, but will, surely, when all is said and done; be worth the same VALUE?

That the real lesson is; that to hold Gold removes the potential for loss of VALUE.

[metalman]

Re: Debt-deflation Bear Market Update - Part I: First Bounce officially over (really)

Should the government institute a 90% "collectibles" tax on gold profit before you sell the coins, if you sell them for $1500 you will have earned $142 after-tax profit. Thus, you will have doubled your money in 37 years . . . but considering inflation over that time period, that profit would be worth considerably less in 1972 dollars.

Don't get me wrong . . . I'm a gold owner, too . . . but the investment is far from bullet-proof.

was that the question? better... not bulletproof...

What Does This Imply For Future Long-Term Returns In The Market?
For 30 year periods (and for other longer periods of at least 15 years) starting today we should expect the nominal GDP plus dividends figure to be in the range of about 7.5% (although with huge volatility around that average figure in any given year). This somewhat low level is driven by today's very low interest rate outlook, low inflation outlook and relatively modest real GDP growth outlook. Due to the historical and logical relationship of large-capitalization stock returns being no greater than the sum of nominal (after-inflation) GDP plus the dividend yields, we should not expect large-capitalization stock returns to exceed about 7.5%. And this is before trading and management costs and before any income taxes.

stocks were close... better if taxes taken into account... not if survivor bias.