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"factoid"?????????? Fact. You really don't understand why the...

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wombat53

7,702 Posts.

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17/02/16

21:51

Post #: 17047406
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Originally posted by madamswer ↑

@wombat53

"I'm not sure if people are aware that gold has actually outperformed the S&P 500 since 2001- thru 2015, despite the brutal 40% cyclical gold bear mkt of recent years"

Yes, I am sure not too many are aware of that handsome little factoid.
I certainly wasn't aware of it, so thanks for alerting me to it.

Which promoted me to do a bit more investigation about the forces at work here.

And, I have to tell you, my findings are not that flattering of gold as a relative investment destination.

Because, over your chosen time frame of 2011 to today (i.e. 15 years), returns from an investment in gold certainly did beat the S&P handsomely, to wit:

15-YEAR COMPOUND ANNUAL TOTAL RETURNS (%pa)
Gold = 10.5%
S&P = 5.9%

However, there's a little party-pooper trick I stumbled across in my investigations.... over just about any other time frame, it is gold that is outperformed by the S&P basket of stocks.

25-YEAR COMPOUND ANNUAL RETURNS
Gold = 4.7% pa
S&P = 8.4% pa

20-YEAR COMPOUND ANNUAL RETURNS
Gold = 5.5% pa
S&P = 7.0% pa

10-YEAR COMPOUND ANNUAL RETURNS
Gold = 7.7% pa
S&P = 8.0% pa

5-YEAR COMPOUND ANNUAL RETURNS
Gold = minus 1.6% pa
S&P = 12.7% pa

So while gold is indeed a neat hedge against inflation, it serves this purpose somewhat less capably than do equities.

(The exception to this quite convincing empirical evidence is - somewhat curiously - the period which you happen to have chosen for your pro-gold argument which has been heralded in a number of posts from you. But now that you have the data more comprehensively presented to you, you will be in a position to qualify your view in future posts.)

PS. I note that you have become notably silent following my factually constructive critique of your somewhat wild assertion that equities have been in a "secular bear market since 2001" (Post #17034766: "The inverse is the case with equities, which I won't explain again (it's nap time)....but very briefly, entered a secular bear mkt in 2001, punctuated by a couple of obvious cyclical bull markets, the most significant being The Great Recession, from which we've still not recovered.)."

Because, as shown above, total compound annual average investment returns from the S&P Index since 2001, namely 5.9%pa, have beaten inflation by several orders of magnitude.

You would be one well-off bloke/sheila had you invested the Index in 2001, re-invested the dividends each year, and then spent the next 15 years busying yourself with little more than carefree surfing.

You certainly wouldn't feel like you were part of anything like a "secular bear market".
Quite the opposite, I reckon.

Finally, I'm not sure what you mean by "...The Great Recession, from which we've still not recovered" The chart of the S&P that I am looking at here in Australia (I'm almost 100% certain your American version will look the same) shows the Index having more than doubled since the throes of the Great Recession.

Does that not constitute a recovery in your books?
If not, can you say what does?

Expand

"factoid"??????????
Fact.
You really don't understand why the S&P has increased from 2009? Are you serious? Again, are you serious?
Follow me, as I follow you, and easily read my numerous explanations of this matter. Tired of repeating myself.
By the way, in addition to having explained this precisely, it's a cyclical bull in a secular bear mkt. How many times must I say this?
Finally, 1.75% GDP growth in US (and 0.7% (annual, 4Q/2015), and subject to at least 2 revisions, per Yellen to Congress last week, vs HISTORICAL trend of 3.5% ? But what's 50% growth reduction between friends? Small change......
"Does that not constitute a recovery in your books?"
No. Ask the unemployed, look at GDP growth, as per above, no, and no again.
I need to get out now, and meet some real people.
Best, as always,
wombat53
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