"I haven't lost money because I still have the same number of ounces"
Baley
Posts: 22,660 ✭✭✭✭✭
You sometimes hear this said by stackers whose holdings are down in value from the peak, and/or from what they paid.
However, the illogic of this argument becomes apparent if one replaces "ounces" with "shares", as in: "I still have the same number of shares" of a stock that has declined in value, "and therefore I haven't lost money because I haven't sold".
They might get it back someday, but it is self-delusion for either one of them to argue that they haven't "lost money" (in terms of current market value) by holding an asset that has declined in value.
Some folks also intentionally ignore the additional opportunity cost lost in tying up the capital in underperforming assets, but they say that they have "insurance" and a "collectible", which is great (I do it too, admittedly, though I try to fight the tendency in myself)
Just thinking out loud here.. what do you think?
However, the illogic of this argument becomes apparent if one replaces "ounces" with "shares", as in: "I still have the same number of shares" of a stock that has declined in value, "and therefore I haven't lost money because I haven't sold".
They might get it back someday, but it is self-delusion for either one of them to argue that they haven't "lost money" (in terms of current market value) by holding an asset that has declined in value.
Some folks also intentionally ignore the additional opportunity cost lost in tying up the capital in underperforming assets, but they say that they have "insurance" and a "collectible", which is great (I do it too, admittedly, though I try to fight the tendency in myself)
Just thinking out loud here.. what do you think?
Liberty: Parent of Science & Industry
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<< <i>You sometimes hear this said by stackers whose holdings are down in value from the peak, and/or from what they paid.
However, the illogic of this argument becomes apparent if one replaces "ounces" with "shares", as in: "I still have the same number of shares" of a stock that has declined in value, "and therefore I haven't lost money because I haven't sold".
They might get it back someday, but it is self-delusion for either one of them to argue that they haven't "lost money" (in terms of current market value) by holding an asset that has declined in value.
Some folks also intentionally ignore the additional opportunity cost lost in tying up the capital in underperforming assets, but they say that they have "insurance" and a "collectible", which is great (I do it too, admittedly, though I try to fight the tendency in myself)
Just thinking out loud here.. what do you think? >>
Agree 100%.
<< <i>You sometimes hear this said by stackers whose holdings are down in value from the peak, and/or from what they paid.
However, the illogic of this argument becomes apparent if one replaces "ounces" with "shares", as in: "I still have the same number of shares" of a stock that has declined in value, "and therefore I haven't lost money because I haven't sold".
They might get it back someday, but it is self-delusion for either one of them to argue that they haven't "lost money" (in terms of current market value) by holding an asset that has declined in value.
Some folks also intentionally ignore the additional opportunity cost lost in tying up the capital in underperforming assets, but they say that they have "insurance" and a "collectible", which is great (I do it too, admittedly, though I try to fight the tendency in myself)
Just thinking out loud here.. what do you think? >>
While much of your opinion is valid.... At least there are no reverse splits on PM's
Although the line gets a bit blurry when it comes to semi-collectible bullion. A lot of old pour bars fell into the market with silver at $35+ per ounce. Many of them still retain a strong premium. Even modern silver coins retain some premium, such as the 2011 Silver Maple Leaf Grizzly coins which sold out with silver at $40+ per ounce. They traded at a huge premium for a very long time after the crash. They still trade at a fairly high premium over the regular 2011 maples.
Guess Bernanke has done away with the living off the interest crowd.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I know what you meant and I agree with you for the most part.
Too many positive BST transactions with too many members to list.
<< <i>Just thinking out loud here.. what do you think? >>
Like others have stated, I would tend to agree with what you have said.
I think deciding what PM's to buy and how much of each to own, as well as when / if / how to adjust those holdings, is an individual thing, each person doing what he/she feels is appropriate for their own situation.
I am most definitely in the 'insurance' camp. I look at PM's as something to have 'just in case'. I actually own less than a traditionally recommended percentage, particularly given the downturn in price.
I am probably too conservative when it comes to where and how I allocate resources and though I may not see soaring growth, so far that approach hasn't gotten me in any trouble either.
I'll share an analogy that just happened to me today.....
I am a bit of a safety nut. I keep a pretty reasonably stocked supply of all your basic household medical needs and few extra less typical ones. One of those less typical supplies is a blood clotting agent called Celox. Celox comes in several forms, as loose powder granules, impregnated gauze and sponge pads to name a few. It's used on the battlefield to stop severe bleeding. Well the stuff isn't exactly cheap to buy and it has a somewhat limited shelf life (a couple of years) so when rotating out expired packages and replacing them, were I might spend $70 bucks to cover med kits in the house and a couple of cars, I am often plagued with the thought that I'm wasting my money, thinking "hell I haven't had to use these and I might never have to". I have always pushed past that thought and focused on the fact that $70 will mean absolutely nothing to me should the day arrive that I need to use the Celox. Well, low and behold, didn't just this morning my wife's hand slip while she was preparing some food and the very sharp boning knife instantly produced a very nasty, bloody cut in her hand that we couldn't seem to control by traditional means. It was not going to be life threatening, but it was clearly more than your average kitchen cut and the amount of blood was scaring my wife. I had her hold pressure while I grabbed the Celox, which I keep close at hand in one of the cabinets, and proceeded to apply the granules to area of her cut. The results were immediate and reassuring. We wrapped and protected the wound after keeping pressure on it for a few minutes. In the end all was fine. Bottom line is that, though I may not have "needed" the Celox for my wife's survival, I was sure glad I had it on hand, and she was too, and never once during the whole ordeal did I think "Damn, I spent XX dollars for this stuff and now I have to buy more. There is no price that can be attached to peace of mind.
97% of all PM's I own where purchased long ago, much of it pre 2000 and earlier, so I am still doing ok in terms of valuation. Despite that, if I were to look across the various types of PM's I own and then value them at their prior highs, I would be out more than $xx,xxx.xx Does it bother me........well, just refer back to how I feel about that price on piece of mind.
JC
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<< <i>You sometimes hear this said by stackers whose holdings are down in value from the peak, and/or from what they paid.
However, the illogic of this argument becomes apparent if one replaces "ounces" with "shares", as in: "I still have the same number of shares" of a stock that has declined in value, "and therefore I haven't lost money because I haven't sold".
They might get it back someday, but it is self-delusion for either one of them to argue that they haven't "lost money" (in terms of current market value) by holding an asset that has declined in value.
Some folks also intentionally ignore the additional opportunity cost lost in tying up the capital in underperforming assets, but they say that they have "insurance" and a "collectible", which is great (I do it too, admittedly, though I try to fight the tendency in myself)
Just thinking out loud here.. what do you think? >>
Balance. Reshuffle. Repeat.
ed4triggerfinger
I tend to think of the 5% of assets in precious metals the same way, most likely dead money for a long while, but would be essential as border bribes in a true SHTF black swan event.
that said, I'm glad we do not have 50 or 90% of our dough in metals, just as I'm glad we do not have cases and cases of epipens or celox "stacked" in all the rooms
Liberty: Parent of Science & Industry
A "peak" is only the last, most recent high - until it gets replaced.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Coinfame,Kaelasdad,Type2,UNLVino,MICHAELDIXON
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Knowledge is the enemy of fear
If I own a stock it can go to zero even if I never sell it. General Motors
and Eastman Kodak are two recent examples. Both companies were once among
the 5 most valuable companies in the world and members of the Dow Jones Ind Avge.
If I own gold or silver it is not going to zero. The ancient people
valued gold and silver. Future people will also.
I can choose to make gold or silver my benchmark and value the
dollar against one of the metals. In that case, it is the dollar that is
going up and down, not the metal.
The definition of money is:
1) Medium of exchange;
2) Store of value;
3) Unit of account.
Everyone can make their own determination as to how Dollars do in the three
categories vs. Gold, but Apple shares will not qualify.
<< <i>They've lost money, they just haven't realized it yet. >>
That's true with any asset. "You haven't lost anything until you cash it in."
corporations at one time, saw their stocks become worthless.
GM stock still trades and is doing very well, but if you owned the original shares
they became worthless. You lost your entire investment with no chance of recovery.
You're comparing apples to oranges.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
Baley, you know perfectly well what an "unrealized loss" or and "unrealized gain" are.
In my PM portfolio, I have many unrealized gains and just a few unrealized losses. Some of my more recent purchases are probably unrealized losses.
Does that mean I'm in deep doodoo? No, it means that I have to sell roughly equal amounts of both whenever I want to raise cash.
If you believe in conventional portfolio rebalancing, you probably sell when you shouldn't as often as you sell when you should.
It's a red herring for you to continually suggest that you know what you're doing and PM stackers don't. Just sayin'.
I knew it would happen.
<< <i>As a stock guy I am going to disagree with the comparison.
If I own a stock it can go to zero even if I never sell it. General Motors
and Eastman Kodak are two recent examples. Both companies were once among
the 5 most valuable companies in the world and members of the Dow Jones Ind Avge.
If I own gold or silver it is not going to zero. The ancient people
valued gold and silver. Future people will also.
I can choose to make gold or silver my benchmark and value the
dollar against one of the metals. In that case, it is the dollar that is
going up and down, not the metal.
The definition of money is:
1) Medium of exchange;
2) Store of value;
3) Unit of account.
Everyone can make their own determination as to how Dollars do in the three
categories vs. Gold, but Apple shares will not qualify. >>
Good stuff.
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>Not true of every asset. General Motors, Eastman Kodak, K-Mart, Johns Manville, Lehman, etc., all major
corporations at one time, saw their stocks become worthless.
GM stock still trades and is doing very well, but if you owned the original shares
they became worthless. You lost your entire investment with no chance of recovery. >>
If some one held on to the above stocks, with all the pre warnings and publicity of potential bankruptcy, they probably were not from this planet and or needed the tax break. We both know, a company does not go belly up over night. PM stackers have been warned numerous times over the last 2 1/2 years, that it's not a "smart investment" at the time and trying to catch a "falling knife" usually results in painful cuts. I myself, have numerous abrasions on my hands.
Metals are the true currency, though they do have to be converted to the paper when making most purchases.
To put it another way, if you have $100,000 in the bank, you don't look at the currency exchange rate each morning to decide whether your cash has gone up or down in value each day. At least most folks do not.
<< <i>We have it backwards when we measure the value the gold or silver against the dollar rather than the other way around.
Metals are the true currency, though they do have to be converted to the paper when making most purchases.
To put it another way, if you have $100,000 in the bank, you don't look at the currency exchange rate each morning to decide whether your cash has gone up or down in value each day. At least most folks do not. >>
Why would I have to look at the currency exchange rate to see if the amount in my US checking, savings or MM account has gone up or down? I most certainly don't. If metals are the "true currency," why would you have to convert it in order to make use of it? Your theory does not compute.
<< <i>Why would I have to look at the currency exchange rate to see if the amount in my US checking, savings or MM account has gone up or down? I most certainly don't. If metals are the "true currency," why would you have to convert it in order to make use of it? Your theory does not compute. >>
Generally when the value of our currency drops, costs of imported goods increase. So even though you would have the same number of dollars, they would buy less.
As inflation has remained relatively stable ( between 5% and 12%) since WWII, paper currency has been a convenient tool for exchange. Problem is, the federal reserve has quadrupled the supply of US currency in the last 5 years so that we may soon see the day where merchants will be slow to accept greenbacks and more anxious for the metals, or perhaps a gold back digital currency.
I recall reading about a South American nation maybe two decades ago, where the inflation rate was 20% a month. Vendors could not price their goods in the local currency as they would need to adjust the prices daily. They tagged everything in US Dollars, and did the conversion to the local currency at the checkout.
Don't think that that cannot happen here.
--Severian the Lame
Kip
<< <i>"I haven't lost money because I still have the same number of ounces" >>
Fannie and Freddie: "I haven't lost money because I still have the same number of houses".
unrealized gain- you bought low and the price is higher right now but you're not selling, so no real gain.
unrealized loss- you bought high and the price is lower now but you're not selling, so no real loss.
I guess the unrealized loss could be associated with "leaving money on the table" when you could've made more $$$ with the same amount of ounces if you had not waited to sell after the price falls.
Too many positive BST transactions with too many members to list.
Knowledge is the enemy of fear
<< <i>Those who equate investing to gambling are destined to a gamblers profits. >>
Yes, if they gamble wisely.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I knew it would happen.
Time is money and is one's most valuable asset. Time is something no one can create yet it is lost every day. Use time wisely.
To add and to be more precise---I oftentimes have up to 80% of my investable assets in cash.
Knowledge is the enemy of fear
I agree that cash isn't a bad place to be in this low interest rate environment, and I'm assuming that in saying "cash" you mean liquid accounts, brokerage accounts, etc.
So, my followup question is - how much credence do you put on the chances of an overnight devaluation or an overnight Chinese dumping of Treasuries, and the impact on your accounts that it might have?
Do you think sovereign default risk is worth worrying about at this juncture?
I knew it would happen.
0%
Do you think sovereign default risk is worth worrying about at this juncture?
If that sovereignty is the USA? No, I am not worried.
To be quite honest I really dont know where all this talk about China dumping Treasuries comes from. There have been many links over the years to supposed dumping yet there is not one shred of evidence. This talk is all simply fear mongering among politicians and entities eager to sell "insurance".
Please show me any dumping of treasuriesPlease show me dumping of treasuries.
Knowledge is the enemy of fear
Unrealized Gains and Losses are not realized until sale.
So, if you haven't sold, you haven't gained or lost anything.
0%
Do you think sovereign default risk is worth worrying about at this juncture?
If that sovereignty is the USA? No, I am not worried.
To be quite honest I really dont know where all this talk about China dumping Treasuries comes from. There have been many links over the years to supposed dumping yet there is not one shred of evidence. This talk is all simply fear mongering among politicians and entities eager to sell "insurance".
Please show me any dumping of treasuries. Please show me dumping of treasuries. >>
Based on your chart, there isn't any dumping of Treasuries going on. Fair enough, but I didn't say that dumping was ongoing - I was asking about the possibility of it.
Do you think the chart is correct and true? Given what we know about our government operations (and the Fed) in so many different areas - including the exchanges and the markets in general, how can you accept this tabulation on its face?
Did you catch Stockman's comments this afternoon while he was speaking with Santelli? There's no attempt being made to get a handle on the debt. If you think that's not a problem, I simply disagree. The problem is cumulative and it's accelerating.
I knew it would happen.
<< <i>You sometimes hear this said by stackers whose holdings are down in value from the peak, and/or from what they paid.
However, the illogic of this argument becomes apparent if one replaces "ounces" with "shares", as in: "I still have the same number of shares" of a stock that has declined in value, "and therefore I haven't lost money because I haven't sold".
They might get it back someday, but it is self-delusion for either one of them to argue that they haven't "lost money" (in terms of current market value) by holding an asset that has declined in value.
Some folks also intentionally ignore the additional opportunity cost lost in tying up the capital in underperforming assets, but they say that they have "insurance" and a "collectible", which is great (I do it too, admittedly, though I try to fight the tendency in myself)
Just thinking out loud here.. what do you think? >>
I think you are basing your assumption on 90% of the people that invested in PM's for mid to short term gains. When I bought the majority of my silver about 3 years ago I was advised not to invest unless I was investing long term, 10 plus years. I do admit I thought my bullion would have done better then it has, IE zero gain, but I can't judge it's performance until 7 more years. I am not in the bullion game to watch the spot price on a daily basis.
I don't have to worry like I do in certain stocks, so many factors affect stocks that just don't affect bullion. I mean hell a company going from a good CEO to a bad CEO can cripple a huge company in less then 5 years. So while to you it might be tying up capitol to me it's not money I want to risk in another investment. I do understand your point if you are actively trading on a more frequent basis.
Successful card BST transactions with cbcnow, brogurt, gstarling, Bravesfan 007, and rajah 424.
Knowledge is the enemy of fear
<< <i>Those who equate investing to gambling are destined to a gamblers profits. >>
Yeah baby !
However, it still stings.. Especially since I'm out of work during this heck of a dip. I do still fondle my bars from time to time.
There is something very therapeutic about knowing that it's real.
I knew it would happen.
<< <i> I do still fondle my bars from time to time.
There is something very therapeutic about knowing that it's real.
Does that pay the bills?
Knowledge is the enemy of fear
I knew it would happen.
I knew you would write this. Of course since a G report it must be false, misleading, a conspiracy or manipulated. LOL
Thats the beauty of a conspiracy, as it forces the opposition to prove a negative. And since you cant prove a negative the conspiracy theory lives on forever. So I'll turn it around. Prove to me the G report is false.
China has ZERO incentive or reason to sell Treasuries. And even if they did, there are willing buyers all over the world who will eagerly buy them. Many of them are your neighbors. But aside from that the Japanese would love to trade in their JGBs-Japanese Govt Bonds-for Treasuries and they have lots of money to spend and invest. Do you think the wealthy Russians want Russian bonds, Chinese bonds or American bonds? How about Korean companies that sell products in the USA? And the higher yields go in the US vs the rest of the world the higher the demand.
US citizens have $4 trillion in money markets. We, Americans, could buy all of China's bonds and the market wouldnt even blink.
Knowledge is the enemy of fear
One only need look at the reasons why economic reports need be tainted and how easy it is to taint them. No different than the control of any information (or misinformation) that intentially hits the press. Doesn't have to be a lie to still be far from the truth. Twisting the truth works just as well.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Anyone who believes government economic reports are not manipulated should not be allowed to comment on conspiracies. Conspiracy is nothing short of deception. When public service becomes public thievery you can bet your last silver dollar deception was its method.
One only need look at the reasons why economic reports need be tainted and how easy it is to taint them. No different than the control of any information (or misinformation) that intentially hits the press. Doesn't have to be a lie to still be far from the truth. Twisting the truth works just as well. >>
Very similar to how big companies can tweak their earnings and forecasts to look like they are stable only to find out 2 years later that they are actually close to bankruptcy.
Successful card BST transactions with cbcnow, brogurt, gstarling, Bravesfan 007, and rajah 424.
<< <i>
<< <i>Anyone who believes government economic reports are not manipulated should not be allowed to comment on conspiracies. Conspiracy is nothing short of deception. When public service becomes public thievery you can bet your last silver dollar deception was its method.
One only need look at the reasons why economic reports need be tainted and how easy it is to taint them. No different than the control of any information (or misinformation) that intentially hits the press. Doesn't have to be a lie to still be far from the truth. Twisting the truth works just as well. >>
Very similar to how big companies can tweak their earnings and forecasts to look like they are stable only to find out 2 years later that they are actually close to bankruptcy. >>
In the case of big companies, at least investors can recover losses through the courts by proving fraud. Try taking a federal agency to federal court.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Do you own any US bonds outright (not in a mutual fund)? I don't, and I'm not about to buy any.
I knew it would happen.