tag:blogger.com,1999:blog-9619963.post2012468701179030616..comments2023-12-08T12:50:34.303-08:00Comments on W.C. Varones: GMO's Jeremy Grantham doesn't understand gold historyW.C. Varoneshttp://www.blogger.com/profile/17663570682958847976noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-9619963.post-31213532267245990422012-03-02T04:58:42.589-08:002012-03-02T04:58:42.589-08:00Is gold a bubble?<a href="http://www.zerohedge.com/news/infographic-gold-bubble" rel="nofollow">Is gold a bubble?</a>wcvhttp://www.wcvarones.comnoreply@blogger.comtag:blogger.com,1999:blog-9619963.post-46387672224997713322012-03-01T09:27:35.091-08:002012-03-01T09:27:35.091-08:00You're preaching to the choir on dividends. I...You're preaching to the choir on dividends. I <a href="http://www.wcvarones.com/2012/01/silicon-t-bill.html" rel="nofollow">love dividend stocks</a>, including <a href="http://www.wcvarones.com/2006/12/report-card.html" rel="nofollow">WMT since 2006 at $46</a>.<br /><br />I've got far more in equities than in gold, but dogmatically zero-weighting gold because you are adamant about cash flows is <a href="http://www.wcvarones.com/2011/10/gold-and-asset-allocation-less-risk.html" rel="nofollow">hazardous to your financial health</a>.<br /><br />And if zero cash flows are a no-go, you should have zero cash and zero Treasuries as they have NEGATIVE real after-tax cash flows.W.C. Varoneshttp://www.wcvarones.comnoreply@blogger.comtag:blogger.com,1999:blog-9619963.post-77778197516792826442012-03-01T06:43:08.826-08:002012-03-01T06:43:08.826-08:00Well... there is no multiple for gold. Historical...Well... there is no multiple for gold. Historically, consumer staples trade at a premium to stocks. That premium stretchs up to 40x at times, so 17-20 ain't bad. <br /><br />Gold is a crowded trade. Yahoo now quotes gold on the front page of yahoo finance. It didn't do that a decade ago (a good time to buy). <br /><br />Personally, I don't know anyone who isn't a gold bug nowadays. The story for owning gold is absolutely perfect. <br /><br />Meanwhile, walmart just increased their dividend again this year (+9%). They're issuing debt at rock bottom interest rates to fund share repurchases. <br /><br />Like you said, You're just hoping more people will buy gold and that you'll time your sale perfectly. I hope more people sell Walmart because there won't be any Walmart shares left in 18 years at the current rate of their buyback. Meanwhile, I get paid.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-9619963.post-18711604565944189202012-03-01T04:41:12.666-08:002012-03-01T04:41:12.666-08:00Consumer staples did indeed outperform gold in the...Consumer staples did indeed outperform gold in the calendar year 2011, but gold has since <a href="http://finance.yahoo.com/echarts?s=XLP+Interactive#symbol=xlp;range=20101231,20120229;compare=gld;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;" rel="nofollow">passed them by</a>.<br /><br />Cash flow is getting harder and harder to find in Zimbabwe Ben's ZIRP World, and paying crazy multiples for tiny cash flow is not a way to avoid bubbles.<br /><br />Most of the stocks in the XLP Consumer Staples ETF have <a href="http://finance.yahoo.com/quotes/PG,MO,WMT,KO,PEP,PM,COST,KFT,CL,CVS/view/fv;_ylt=AncL1iRpb7oJUBQ7fOT3fNwLv7gF;_ylu=X3oDMTE1bzIxN2lmBHBvcwMzBHNlYwN5ZmlUYWJsaXN0BHNsawNmdW5kYW1lbnRhbHM-" rel="nofollow">P/E multiples of 17-20</a> on top of what many argue are peak profit margins. Dividend yield is less than 3%. I'd take that over Treasuries, but it's hardly screaming cash flow.<br /><br />Bubbles happen when the masses rush into an asset class. You knew lots of people buying tech stocks in 1999. You knew lots of people buying houses and becoming realtors and mortgage brokers in 2003-2007. How many people do you know who have even 1% of their retirement savings or net worth in gold?W.C. Varoneshttp://www.wcvarones.comnoreply@blogger.comtag:blogger.com,1999:blog-9619963.post-34320925588048442992012-02-29T20:58:10.160-08:002012-02-29T20:58:10.160-08:00Last year consumer staples stocks outperformed gol...Last year consumer staples stocks outperformed gold (I forgot the exact numbers buy it was by about 5%).<br /><br />While consumer staples haven't done so great over the last decade like gold has done, it's important to note that consumer staples outperformed gold during the carter era (gold's last spike). When gold collapsed, consumer staples kept on going...<br /><br />Cashflow. It's not sexy but it will keep you out of bubbles. The story for gold is perfect right now. Perfect stories usually end sadly.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-9619963.post-35170297924122630712012-02-29T20:43:01.801-08:002012-02-29T20:43:01.801-08:00Gold doesn't produce cashflow that you can mea...Gold doesn't produce cashflow that you can measure. You're just hoping that a greater fear comes along to propel it higher.<br /><br />While goldbugs will tout the history of gold as currency, it's also important to tout the history of speculating on things that don't have cashflow (tulips, etc.).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-9619963.post-41237098587218344032012-02-28T12:41:19.505-08:002012-02-28T12:41:19.505-08:00I can't believe I actually followed that. I ne...I can't believe I actually followed that. I never thought about the issue of double diget inflation relative to gold in than fashion.SarahBhttps://www.blogger.com/profile/10201948440490000538noreply@blogger.comtag:blogger.com,1999:blog-9619963.post-37436794393735527472012-02-28T00:05:49.664-08:002012-02-28T00:05:49.664-08:00Terrific info!Terrific info!Doo Doo Econhttps://www.blogger.com/profile/05010201031724821495noreply@blogger.com