You know what's also conservative?  Staying in index funds    
(or at least building a small cash position alongside your index funds)

They could just as easily have lost 10% as gained 17% in that time period, with gold, and it is only in hindsight that you know the outcome.

Think of all of the geopolitics that has transpired in the last 6 months that has been injecting uncertainty into the market.
If any of it had turned out differently, the value of gold would be different today.

And if you knew how all of the geopolitics of the last 6 months were going to play out... there were probably more valuable plays to make that going long on gold.

I'm not trying to give stock advice because that would require quick changes if something happens and I'm still learning the ropes.


As for gold we are just barely beginning to see tremors of the recession. So as I see it, many major investors are still finding ways to make moves in the stock market so Gold hasn't really made it's biggest gains yet. When earnings reports start getting even weaker, and people start losing jobs, and consumer confidence begins to go, gold is going to go high.

Edit: Also, I think it's too late to turn the ship around. A deal with China woildn't stop the recession, at best it would slow it down. The stock market and economy will need a shake up to get back to fundamentals.

There seems to be a lot of people that are failing to distinguish between what a "normal recession" looks like in terms of market impacts, versus how the "great recession" ended up playing out.


I think it is totally reasonable for people to have 5%, or maybe 10%, of their portfolio in metals.  (assuming they are willing to actively rebalance)

But I don't think there are any market conditions where I'd want to be overweight in gold, versus any other store of value.



Unless you are buying physical gold, it can be very hard to know that, during a market crash, you are really holding what you THINK you're holding.
(at least 10 years ago, it was the case that the various precious metals ETFs were not fully audited with any regularity)
i.e. you are taking on "counterparty risk", where avoiding that risk is one of the classic arguments for having gold in the first place

But then with physical gold, you have a ton of "storage risk", assuming you have anywhere close to 5-10% of your portfolio in that form.
(also, with physical gold, you run into potentially substantial premiums relative to spot value -- along with the obvious counterfeit risks)




Anyway... point of all that is -- if one has a "reasonable" upper limit on their allocation of gold (i.e. 10%), then a 20% upswing is only 2% of your total portfolio over that period.

That isn't particularly painful to miss out on, IMO, in terms of short-term value swings, if you weren't comfortable buying gold in the first place because you wanted to keep it simple with indexes.




 

I get that the last recession was different. I also understand that subprime mortgages are being given out again at high rates, corporate dept is higher than ever, the economy has been running on low interest rates, and the wealth gap may partially prevent recovery because the lower classes do not have disposable income to feed expansion or growth.

I mostly agree on the risk percentages. I might think 5-15%.

What do you mean by actively rebalance?

I didn't know about the differences between physical and buying on the commodities market. I'll have to read more into that. I was just giving my gf a hard time for buying her gold above market through a jewelry store she goes to.

But in addition to the value it creates itself isn't there value being created through diversification and from losses that the index funds may take from a systemic decline.

"Actively rebalance" -- meaning you set some limits for yourself, where if your target is 10%, once you're at, say 15%, you sell back down to 10%, or if you're at 5%, you buy back up to 10%.  (however you want to bracket that is up to you, but the point is to have a limit set ahead of time that you will actually follow through on)

If you have a very simple portfolio (like a 3 fund portfolio), you might only rebalance once or twice per year (and that rebalancing might just be in the form of how you deploy new cash, rather than selling anything at all)


But if you're going to trade something like metals as a "substantial" (i.e. 10%) portion of your portfolio, you probably want to pay more attention than once or twice per year.

At the very least, figure out some kind of trailing stop.

 

I see. Thank you.

Cali - https://finance.yahoo.com/news/co...

Interesting news story regarding the vault-gold that backs some of the ETFs out there.

In this case the counterfeits are real gold, just with counterfeit stamps. But that may well have other implications as I would assume it is possible the counterfeit gold might trace back to sources that make holding/keeping it illegal. (and no one knows how widespread the problem is)

It kinda sound's like that is a just a money laundering scheme. Maybe I'm missing something, but I don't see the implications for the Gold supply. Also, although gold has intrinsic value, and it's value should be related to quantity, I think it's market value is more a function of it's relationship to market instabilty and fears of inflation/deflation of currency and investment losses as opposed to being a function of the amount that is available.

and, in yesterday’s paper...

From what they are saying, it's because the dollar strengthened, which seems reasonable. I think the more important thing to notice is how small the decline is.

I don't think it has implications of total supply, in terms of spot price of gold as a broader commodity.

I was pondering whether it has implications for the gold ETFs that back their shares with physical gold.
(i.e. if an ETF finds out that some non-trivial amount of their gold is illegal in origin... what happens?)



This is all a pretty different problem from back in the great recession when tungsten bars were being gold plated and passed off to smaller buyers who couldn't as easily check for counterfeits.

Man got awfully quiet in here when Gamestop started rallying again, up double digits yesterday and holding steady today. The big news is after market close with the earnings report.

I will say that I don't think I've ever watched a stock rally so hard into earnings. Basically $3.30 to nearly $5 over 4 days. Usually price stays flat as everyone is too scared to take a position. This is telling me a lot of shorts are getting scared and trying to cover. As they should be, when a profitable company is trading below cash value you shouldn't be shorting the stock.

From reading the chart I'd think a earnings miss would send it to mid $4s or around $4 (depending on severity), but an earnings beat and this thing could go right back to $5.50-$6 range overnight. Time will tell!

Nah, got quiet because I was dealing with a hurricane!  

And I agree that it will be interesting to see how earnings go for them.
(though it seems pretty hard to "miss" earnings when you predict you will lose $0.20 per share)


For the time-being, it seems like Burry being into them so heavily is convincing some people to get on board.
(though his exist strategy isn't very clear, since he entered the stock before it closed the dividend)

Seems like the shorts are panicking before the bell.

The wrinkle about this earnings report was that Gamestop stopped issuing their own guidance, so it is all external analyst expectations.

Even an anchor bounces before its final descent.

No worries Jone, we're rooting for you.

Well, they lost $0.32 per share.
 

I thought their conference call wasn't for another 30 minutes.

https://finance.yahoo.com/m/f71051a0-180b-38f6-9dcc-7d3cbcd5...

OOF!
 

http://news.gamestop.com/home...

Here's their ER.

I'm hoping it works out for you. What's your exit plan on this stock, though?

I have a bunch of GE stock that DCA was about $30 a share, so I've been feeling the pain, too.

 

Outlook for full fiscal year 2019 -- "Comparable Store Sales - A decline in the low teens"

But claims they will swing around to a gain for the year, since it seems like the worse losses may amount to book-keeping issue on how they handled the mobile phone business.  

 

Honestly, every time I go into a GameStop (which is mainly to just look rather than buy), I never see more than 1 other person in there that isn't an employee, and usually it's just a confused parent asking what a YouTube is.

It *could* just be my area, though, since GameStops seem to only ever appear right next to a big box retailer. In most instances, they're across the parking lot from a Target, Walmart, BestBuy, or the mall. It's kind of sad when the Walmart gaming aisle has more patrons than the entire shop dedicated to gaming has 1 or 2 people in it.

I know this is anecdotal, but Gamestop got me into the store to trade in and I haven't done that in 20 years. Then i came back with the store credit bought a bunch of games for my collection bought other games and flipped em for cash. I am very happy with Gamestop right now. I later went out and bought two lots of wii stuff with like 20 mario games to trade in. if they got other people in the store the same way and have a market for vintage stuff, I feel like this could be a model for profitability. Close some stores and they might be okay. I think they need to put a little more time to focus on the pricing of used games. They have the ability to set the price for certain games and I think they can find ways to increase their inventory turnover on some games and increase their margins on others. I really feel like they serve a purpose in the market and can succeed with the right adaptations.

I would like to see them significantly close stores and move into larger locations that host regular gamers nights, like these card game stores that I am seeing locally that are packed in the evenings. People are about experiences now. I think they need to make it a gamers experience to differentiate from the big box stores and digital.

My wife and I said the same of Toys R Us.

I havent read the earnings and will look at it tomorrow. But they historically have bad 3rd quarters and the 4th quarter does almost their entire profit for the year. The seasonality is like a landscaping company who makes profits spring thru fall and loses money all Winter.

Down 16% on opening.

The Cliff's Notes I read of the conference call transcripts made it sound like part of their grand plan is to emphasize collectibles sales, specifically mentioning Funko Pop...


EDIT:  rapidly dropped to -21% after I made the post.  (hovering at the $4 level)

What a ride!