jbond - all good insights. Being critical of market performance and commonly "known" statistics is required to be a good investor IMO. John Mauldin has a good book called "bullseye investing" that covers some of the misnomers of past market performance and provides a great "reality check" while being easy to read. Farm land, or any other property for that matter, is far from the 'perfect' investment. While it is true it is easy to off load a few hundred bucks in gold coins in a saturday afternoon, there are absolutely transaction costs involved. I'd also say they are at least as high (if we are talking about physical metals) as real estate, if not more (different situation for GLD). Note I said if I had a $100m net worth client farm land was a good idea, I can assure you trying to liquidate $10m in physical PM is going to carry some serious transaction costs. One of my best friends runs the majority of the "austin cash for gold" franchise here in Texas. Low dollar amounts he requires about a 25-30% premium to melt value and has only gone above 88% when people bring in 6 figures worth of product. Not saying there are not other places to get a better deal as I have never attempted to sell lots of PM, but I am somewhat familiar with the market (was about to open a franchise before I got hit with a bunch of medical bills).
Where do you put the $10m in physical gold? Your garage? Are you not going to insure it? It won't be free if you do or if you store it at the bank (-this isn't directed at you in any way, just putting the questions out there)
It's true that lots of people have lost millions in the stock market, many of my friends/family members included, but the stock market didn't lose most of it - they did. It's insensitive to say but it is reality. The stock market is at all time highs. The only way people lost money was through bad timing or bad luck, both of which certainly happen on a regular basis. Now if you invested in Japan's stock market we have a different story (ouch!!!).
Regarding my personal performance in the stock market, I agree there is nothing wrong with a honest conversation and I appreciate you having the guts to bring it up. I have definitely had my fair share of losers and felt much of the same pain as everyone on this forum; I've been investing with my own $$ in the markets since I was 18. When i was about 19 and working as an intern for NOV, I got long NOV and RIG and did great until the oil market crashed. I was smart enough to get out without too severe of losses, but losing that money was extremely painful back then. I had nearly killed myself working since 15 and lost what amounted to couple months pay. Better to make your mistakes with 10 shares than 100.
Fortunately, however, the stock market has treated me okay. Nobody likes a braggart, especially me, but I'll talk about it if it's helpful. Not only did I buy massive during the recession with my personal money (think investing rather than trading) and just recently sold off my last remaining chunks for about 80-120% gain on average (see my posts on AAPL, or KMP, or YUM, for example), but I traded the stock market full-time for my livelihood for over 3 years; half at a firm supplying me capital (Kershner Trading Group) and half with my capital (leveraged by a different firm now called Greypoint Capital).
I had zero down months, even after trading expenses which were usually 2-4k per month, in my career. I have never known another trader who can say that honestly - that includes fixed income, equities, and currency traders. Depending on your measurement system, I was somewhere in the top 3 most consistent of 250+ traders in the history of the firm. I tied the firm record for consecutive up days (over a month), had one if not the best biggest up day : biggest down day ratio (over 4), among other things.
My earnings were no where near what I call "**** you money" due to my risk management strategy and hesitation in the face of high risk/high reward situations (I am talking gain 50k lose 40k, not gain $500 lose $250) but one of my good friends and several colleagues achieved that level of success. You'll never here me complain, I was debt free 6 months after graduation from undergrad, pay cash for grad school, have taken some fairly expensive motorbike trips, etc., of which most of the cash was earned as a trader.
All that being said, the quality of the outcome should not be confused with the quality of the decision. Some people (not many) have gotten lucky in the markets but know very little or have no idea what risk they exposed themselves to. This is the guy who cashed out at the top of the tech boom or oil stock boom by luck and not a solid decision making process.
Others have not done so well but have an immense amount of experience and value to share. I recently made an unexpected killing on my NFP stock options because of buy out news; that was mostly luck besides the fact I maxed out my stock options every quarter for the last year, while I had both bad and good luck with my recent speculative play GST (CHK sued them without warning, stock dropped, I reduced my holdings by about a third for a significant loss due to risk management strategy, then it doubled from where I originally purchased it because CHK dropped the suit and in the process GST made out like bandits on some acreage in the woodford shale play in OK) - I know the difference between luck and skill but it has taken almost 10 years.
btw jbond, our views on the market are probably more similar than you think. I am extremely wary when people get too involved in the markets and, partially due to my FINRA licenses, about giving advice. Here I know you guys are a) reading it from the internet and b) generally pretty smart if you own or are interested in owning the NSX :smile:.
In fact, I don't recommend close friends/family invest more than 50% of their net worth in the market unless it is for some tax reason or they are getting a match from their company, etc. People buy and sell at the wrong times due to human nature - not stupidity - and it is difficult to over come. Investing in the 'stock market' also means very different things to different people. I have 20% of my holdings in oil and gas MLP's, 10% in various preferred shares that function more similar to debt instruments than stocks, and 30% in muni bond portfolios. They are all publicly traded on exchanges but they are not the same as buying XOM, GE, or CAT. I also say people must be cognizant of the general market P/E cycles (i.e. now is not a great time to be in the market, 2008/2009 was) and be willing to sell their winners through some sort of strategy. People generally fail to do this and unless your securities pay reliable and substantial dividends, they are destined for failure. Not to mention most companies eventually go bankrupt. The whole DJIA is an outright scam; they replace the losers with winners systematically. If you'd invested in Dow 25 years ago I bet half the companies don't even exist. Success in the markets takes discipline and strategy (or tremendous luck).
