What is wealth?

[davelj]

[quote=4plexowner]”I have noticed an abundance of trophy wives on the open market and it’s kinda fun to see them frustrated with the lack of takers”

are you suggesting that the value of a vapid smile and fake tits has gone down with the real estate market and economy?[/quote]

The value of the vast majority of tangible assets has gone down with the real estate market and economy. And seeing as the smiles and tits crowd (to use your words) *tends* to (unintentionally) seek out leveraged financial lifestyles… it follows logically that this crowd has fallen on hard times. [Although semantically, I prefer “enhanced” to “fake.” But that’s just me.]

[4plexowner]

“The value of the vast majority of tangible assets has gone down”

excellent point (since it leads into a point that I want to make)

WHAT have these values gone down AGAINST?

the easy answer is, “the US dollar”

but wait, the US dollar has gone down too

perhaps the correct answer is that all tangible assets are devaluing RELATIVE TO GOLD which is the only asset class that has shown positive returns for the last 10 years in a row

its hard to think in these terms because we are so US-dollar-centric and brain-washed to believe that gold is a barbarous relic

something to think about …

[4plexowner]

“The value of the vast majority of tangible assets has gone down”

excellent point (since it leads into a point that I want to make)

WHAT have these values gone down AGAINST?

the easy answer is, “the US dollar”

but wait, the US dollar has gone down too

perhaps the correct answer is that all tangible assets are devaluing RELATIVE TO GOLD which is the only asset class that has shown positive returns for the last 10 years in a row

its hard to think in these terms because we are so US-dollar-centric and brain-washed to believe that gold is a barbarous relic

something to think about …

[4plexowner]

“The value of the vast majority of tangible assets has gone down”

excellent point (since it leads into a point that I want to make)

WHAT have these values gone down AGAINST?

the easy answer is, “the US dollar”

but wait, the US dollar has gone down too

perhaps the correct answer is that all tangible assets are devaluing RELATIVE TO GOLD which is the only asset class that has shown positive returns for the last 10 years in a row

its hard to think in these terms because we are so US-dollar-centric and brain-washed to believe that gold is a barbarous relic

something to think about …

[4plexowner]

“The value of the vast majority of tangible assets has gone down”

excellent point (since it leads into a point that I want to make)

WHAT have these values gone down AGAINST?

the easy answer is, “the US dollar”

but wait, the US dollar has gone down too

perhaps the correct answer is that all tangible assets are devaluing RELATIVE TO GOLD which is the only asset class that has shown positive returns for the last 10 years in a row

its hard to think in these terms because we are so US-dollar-centric and brain-washed to believe that gold is a barbarous relic

something to think about …

[4plexowner]

“The value of the vast majority of tangible assets has gone down”

excellent point (since it leads into a point that I want to make)

WHAT have these values gone down AGAINST?

the easy answer is, “the US dollar”

but wait, the US dollar has gone down too

perhaps the correct answer is that all tangible assets are devaluing RELATIVE TO GOLD which is the only asset class that has shown positive returns for the last 10 years in a row

its hard to think in these terms because we are so US-dollar-centric and brain-washed to believe that gold is a barbarous relic

something to think about …

[davelj]

[quote=4plexowner]”The value of the vast majority of tangible assets has gone down”

excellent point (since it leads into a point that I want to make)

WHAT have these values gone down AGAINST?

the easy answer is, “the US dollar”

but wait, the US dollar has gone down too

perhaps the correct answer is that all tangible assets are devaluing RELATIVE TO GOLD which is the only asset class that has shown positive returns for the last 10 years in a row

its hard to think in these terms because we are so US-dollar-centric and brain-washed to believe that gold is a barbarous relic

something to think about …[/quote]

Since 1833 gold has increased in value by 2.3% annually in nominal dollars (http://www.nma.org/pdf/gold/his_gold_prices.pdf). [That’s using today’s gold price.] In inflation-adjusted (that is, “real”) terms, it has approximately held its value (it’s slightly ahead of inflation in real dollars) since 1833. Which is my problem with gold over the long term. At any given time gold might be a good speculative play (and this might be one of them). And it has certainly been a good store of value in real terms over a very long period of time. But…

You’re unlikely to come ahead in real terms owning gold over a long period of time. Over the LONG long term it’s a pure inflation hedge. [Currently it’s likely also serving as an Armageddon hedge.] Which is not a bad thing. But…

Personally, I’d rather own real assets that come out ahead of inflation over the long term if I can purchase them at reasonable prices. I’m not a real estate bull generically right now, but some real estate currently available fits the bill. Also, I’m not an equities bull generically, but some equities also currently fit the bill. Over the long term, I’m not interested in assets that merely keep up with inflation, I want to come out ahead of inflation, and I’m willing to accept the volatility associated with such assets. And I’m not saying that’s easy – and certainly not right now. But gold – while it might prove to be a great speculation for some period – is unlikely to provide good long-term real returns. And that’s my problem with it – it’s less predictable over the long term than assets that throw off cash and tend to throw off more cash as the general price level rises. But that’s just me.

I would not describe gold as a “barbarous relic.” Nor would I assume it will lead to LONG-term riches (short-term speculation aside). It’s just a decent tangible hedge against inflation and financial chaos.

[davelj]

[quote=4plexowner]”The value of the vast majority of tangible assets has gone down”

excellent point (since it leads into a point that I want to make)

WHAT have these values gone down AGAINST?

the easy answer is, “the US dollar”

but wait, the US dollar has gone down too

perhaps the correct answer is that all tangible assets are devaluing RELATIVE TO GOLD which is the only asset class that has shown positive returns for the last 10 years in a row

its hard to think in these terms because we are so US-dollar-centric and brain-washed to believe that gold is a barbarous relic

something to think about …[/quote]

Since 1833 gold has increased in value by 2.3% annually in nominal dollars (http://www.nma.org/pdf/gold/his_gold_prices.pdf). [That’s using today’s gold price.] In inflation-adjusted (that is, “real”) terms, it has approximately held its value (it’s slightly ahead of inflation in real dollars) since 1833. Which is my problem with gold over the long term. At any given time gold might be a good speculative play (and this might be one of them). And it has certainly been a good store of value in real terms over a very long period of time. But…

You’re unlikely to come ahead in real terms owning gold over a long period of time. Over the LONG long term it’s a pure inflation hedge. [Currently it’s likely also serving as an Armageddon hedge.] Which is not a bad thing. But…

Personally, I’d rather own real assets that come out ahead of inflation over the long term if I can purchase them at reasonable prices. I’m not a real estate bull generically right now, but some real estate currently available fits the bill. Also, I’m not an equities bull generically, but some equities also currently fit the bill. Over the long term, I’m not interested in assets that merely keep up with inflation, I want to come out ahead of inflation, and I’m willing to accept the volatility associated with such assets. And I’m not saying that’s easy – and certainly not right now. But gold – while it might prove to be a great speculation for some period – is unlikely to provide good long-term real returns. And that’s my problem with it – it’s less predictable over the long term than assets that throw off cash and tend to throw off more cash as the general price level rises. But that’s just me.

I would not describe gold as a “barbarous relic.” Nor would I assume it will lead to LONG-term riches (short-term speculation aside). It’s just a decent tangible hedge against inflation and financial chaos.

[davelj]

[quote=4plexowner]”The value of the vast majority of tangible assets has gone down”

excellent point (since it leads into a point that I want to make)

WHAT have these values gone down AGAINST?

the easy answer is, “the US dollar”

but wait, the US dollar has gone down too

perhaps the correct answer is that all tangible assets are devaluing RELATIVE TO GOLD which is the only asset class that has shown positive returns for the last 10 years in a row

its hard to think in these terms because we are so US-dollar-centric and brain-washed to believe that gold is a barbarous relic

something to think about …[/quote]

Since 1833 gold has increased in value by 2.3% annually in nominal dollars (http://www.nma.org/pdf/gold/his_gold_prices.pdf). [That’s using today’s gold price.] In inflation-adjusted (that is, “real”) terms, it has approximately held its value (it’s slightly ahead of inflation in real dollars) since 1833. Which is my problem with gold over the long term. At any given time gold might be a good speculative play (and this might be one of them). And it has certainly been a good store of value in real terms over a very long period of time. But…

You’re unlikely to come ahead in real terms owning gold over a long period of time. Over the LONG long term it’s a pure inflation hedge. [Currently it’s likely also serving as an Armageddon hedge.] Which is not a bad thing. But…

Personally, I’d rather own real assets that come out ahead of inflation over the long term if I can purchase them at reasonable prices. I’m not a real estate bull generically right now, but some real estate currently available fits the bill. Also, I’m not an equities bull generically, but some equities also currently fit the bill. Over the long term, I’m not interested in assets that merely keep up with inflation, I want to come out ahead of inflation, and I’m willing to accept the volatility associated with such assets. And I’m not saying that’s easy – and certainly not right now. But gold – while it might prove to be a great speculation for some period – is unlikely to provide good long-term real returns. And that’s my problem with it – it’s less predictable over the long term than assets that throw off cash and tend to throw off more cash as the general price level rises. But that’s just me.

I would not describe gold as a “barbarous relic.” Nor would I assume it will lead to LONG-term riches (short-term speculation aside). It’s just a decent tangible hedge against inflation and financial chaos.

[davelj]

[quote=4plexowner]”The value of the vast majority of tangible assets has gone down”

excellent point (since it leads into a point that I want to make)

WHAT have these values gone down AGAINST?

the easy answer is, “the US dollar”

but wait, the US dollar has gone down too

perhaps the correct answer is that all tangible assets are devaluing RELATIVE TO GOLD which is the only asset class that has shown positive returns for the last 10 years in a row

its hard to think in these terms because we are so US-dollar-centric and brain-washed to believe that gold is a barbarous relic

something to think about …[/quote]

Since 1833 gold has increased in value by 2.3% annually in nominal dollars (http://www.nma.org/pdf/gold/his_gold_prices.pdf). [That’s using today’s gold price.] In inflation-adjusted (that is, “real”) terms, it has approximately held its value (it’s slightly ahead of inflation in real dollars) since 1833. Which is my problem with gold over the long term. At any given time gold might be a good speculative play (and this might be one of them). And it has certainly been a good store of value in real terms over a very long period of time. But…

You’re unlikely to come ahead in real terms owning gold over a long period of time. Over the LONG long term it’s a pure inflation hedge. [Currently it’s likely also serving as an Armageddon hedge.] Which is not a bad thing. But…

Personally, I’d rather own real assets that come out ahead of inflation over the long term if I can purchase them at reasonable prices. I’m not a real estate bull generically right now, but some real estate currently available fits the bill. Also, I’m not an equities bull generically, but some equities also currently fit the bill. Over the long term, I’m not interested in assets that merely keep up with inflation, I want to come out ahead of inflation, and I’m willing to accept the volatility associated with such assets. And I’m not saying that’s easy – and certainly not right now. But gold – while it might prove to be a great speculation for some period – is unlikely to provide good long-term real returns. And that’s my problem with it – it’s less predictable over the long term than assets that throw off cash and tend to throw off more cash as the general price level rises. But that’s just me.

I would not describe gold as a “barbarous relic.” Nor would I assume it will lead to LONG-term riches (short-term speculation aside). It’s just a decent tangible hedge against inflation and financial chaos.

[davelj]

[quote=4plexowner]”The value of the vast majority of tangible assets has gone down”

excellent point (since it leads into a point that I want to make)

WHAT have these values gone down AGAINST?

the easy answer is, “the US dollar”

but wait, the US dollar has gone down too

perhaps the correct answer is that all tangible assets are devaluing RELATIVE TO GOLD which is the only asset class that has shown positive returns for the last 10 years in a row

its hard to think in these terms because we are so US-dollar-centric and brain-washed to believe that gold is a barbarous relic

something to think about …[/quote]

Since 1833 gold has increased in value by 2.3% annually in nominal dollars (http://www.nma.org/pdf/gold/his_gold_prices.pdf). [That’s using today’s gold price.] In inflation-adjusted (that is, “real”) terms, it has approximately held its value (it’s slightly ahead of inflation in real dollars) since 1833. Which is my problem with gold over the long term. At any given time gold might be a good speculative play (and this might be one of them). And it has certainly been a good store of value in real terms over a very long period of time. But…

You’re unlikely to come ahead in real terms owning gold over a long period of time. Over the LONG long term it’s a pure inflation hedge. [Currently it’s likely also serving as an Armageddon hedge.] Which is not a bad thing. But…

Personally, I’d rather own real assets that come out ahead of inflation over the long term if I can purchase them at reasonable prices. I’m not a real estate bull generically right now, but some real estate currently available fits the bill. Also, I’m not an equities bull generically, but some equities also currently fit the bill. Over the long term, I’m not interested in assets that merely keep up with inflation, I want to come out ahead of inflation, and I’m willing to accept the volatility associated with such assets. And I’m not saying that’s easy – and certainly not right now. But gold – while it might prove to be a great speculation for some period – is unlikely to provide good long-term real returns. And that’s my problem with it – it’s less predictable over the long term than assets that throw off cash and tend to throw off more cash as the general price level rises. But that’s just me.

I would not describe gold as a “barbarous relic.” Nor would I assume it will lead to LONG-term riches (short-term speculation aside). It’s just a decent tangible hedge against inflation and financial chaos.

[4plexowner]

davelj, thanks for sharing

what’s “short term” vs “long term”?

what’s “investment” vs “speculation”?

these are excellent questions that everyone needs to resolve for themselves

I set out to build a real estate empire and got way-laid by a real estate bubble – I got sucked into the bubble briefly but then realized I was speculating in real estate and NOT investing [there is a huge difference – an investment (typically) sends you a check every month – if you are writing a regular check to support your real estate ‘investment’, you might ponder the difference between investing and speculating]

for investing, I like to think in terms of secular trends (10-15 years) – IMO a person only needs to make three or four good investment decisions in their lifetime, if:
1. they are investing in secular trends, and
2. they ride the trend until it ends

back in 2002 when I became aware of the building RE bubble and was deciding what to do about it, I identified these secular trends:
– stocks: 1999/2000 through 2015/20 – down [remember the Dow was heading down until 9/11 conveniently provided a reason to pump lots of money into military spending, homeland security, etc – basically the WPA and CCC with a modern day twist]
– real estate: 2002 through 2015/20 – down, and down hard [yes, I have been expecting RE to die a painful death since 2002 – it amazes me that we have made it this far without a serious crash – of course, if I had $23.7 trillion of the taxpayer’s money I could fake a pretty good recovery too]
– precious metals: 1999/2000 through 2015/20 – up, and up dramatically

based on these trends I started selling my real estate and investing in the precious metals

this strategy is working pretty well for me so far – out of real estate by 2006 and into metals – I bought silver around $5/oz and gold around $475/oz (and encouraged everyone on this site to do likewise!!! they are at $16/oz and $1118/oz today) – I’ll hold my gold coin and the three silver ones until 2014/15 or so and then see what secular trends are doing at the time – I expect I will be switching out of the metals and back into real estate or perhaps equities

I believe my original intent of building a real estate empire is along the lines of what you are saying – ie, long-term investments that throw off cash

when the bubble occurred I decided that the short-term capital gains I had in hand were more valuable than the POSSIBILITY of long-term cash flow and appreciation – this decision was made easier by the fact that most of my properties were cash flow negative at the time – and yes, I have had second thoughts about selling all my rentals

[4plexowner]

davelj, thanks for sharing

what’s “short term” vs “long term”?

what’s “investment” vs “speculation”?

these are excellent questions that everyone needs to resolve for themselves

I set out to build a real estate empire and got way-laid by a real estate bubble – I got sucked into the bubble briefly but then realized I was speculating in real estate and NOT investing [there is a huge difference – an investment (typically) sends you a check every month – if you are writing a regular check to support your real estate ‘investment’, you might ponder the difference between investing and speculating]

for investing, I like to think in terms of secular trends (10-15 years) – IMO a person only needs to make three or four good investment decisions in their lifetime, if:
1. they are investing in secular trends, and
2. they ride the trend until it ends

back in 2002 when I became aware of the building RE bubble and was deciding what to do about it, I identified these secular trends:
– stocks: 1999/2000 through 2015/20 – down [remember the Dow was heading down until 9/11 conveniently provided a reason to pump lots of money into military spending, homeland security, etc – basically the WPA and CCC with a modern day twist]
– real estate: 2002 through 2015/20 – down, and down hard [yes, I have been expecting RE to die a painful death since 2002 – it amazes me that we have made it this far without a serious crash – of course, if I had $23.7 trillion of the taxpayer’s money I could fake a pretty good recovery too]
– precious metals: 1999/2000 through 2015/20 – up, and up dramatically

based on these trends I started selling my real estate and investing in the precious metals

this strategy is working pretty well for me so far – out of real estate by 2006 and into metals – I bought silver around $5/oz and gold around $475/oz (and encouraged everyone on this site to do likewise!!! they are at $16/oz and $1118/oz today) – I’ll hold my gold coin and the three silver ones until 2014/15 or so and then see what secular trends are doing at the time – I expect I will be switching out of the metals and back into real estate or perhaps equities

I believe my original intent of building a real estate empire is along the lines of what you are saying – ie, long-term investments that throw off cash

when the bubble occurred I decided that the short-term capital gains I had in hand were more valuable than the POSSIBILITY of long-term cash flow and appreciation – this decision was made easier by the fact that most of my properties were cash flow negative at the time – and yes, I have had second thoughts about selling all my rentals

[4plexowner]

davelj, thanks for sharing

what’s “short term” vs “long term”?

what’s “investment” vs “speculation”?

these are excellent questions that everyone needs to resolve for themselves

I set out to build a real estate empire and got way-laid by a real estate bubble – I got sucked into the bubble briefly but then realized I was speculating in real estate and NOT investing [there is a huge difference – an investment (typically) sends you a check every month – if you are writing a regular check to support your real estate ‘investment’, you might ponder the difference between investing and speculating]

for investing, I like to think in terms of secular trends (10-15 years) – IMO a person only needs to make three or four good investment decisions in their lifetime, if:
1. they are investing in secular trends, and
2. they ride the trend until it ends

back in 2002 when I became aware of the building RE bubble and was deciding what to do about it, I identified these secular trends:
– stocks: 1999/2000 through 2015/20 – down [remember the Dow was heading down until 9/11 conveniently provided a reason to pump lots of money into military spending, homeland security, etc – basically the WPA and CCC with a modern day twist]
– real estate: 2002 through 2015/20 – down, and down hard [yes, I have been expecting RE to die a painful death since 2002 – it amazes me that we have made it this far without a serious crash – of course, if I had $23.7 trillion of the taxpayer’s money I could fake a pretty good recovery too]
– precious metals: 1999/2000 through 2015/20 – up, and up dramatically

based on these trends I started selling my real estate and investing in the precious metals

this strategy is working pretty well for me so far – out of real estate by 2006 and into metals – I bought silver around $5/oz and gold around $475/oz (and encouraged everyone on this site to do likewise!!! they are at $16/oz and $1118/oz today) – I’ll hold my gold coin and the three silver ones until 2014/15 or so and then see what secular trends are doing at the time – I expect I will be switching out of the metals and back into real estate or perhaps equities

I believe my original intent of building a real estate empire is along the lines of what you are saying – ie, long-term investments that throw off cash

when the bubble occurred I decided that the short-term capital gains I had in hand were more valuable than the POSSIBILITY of long-term cash flow and appreciation – this decision was made easier by the fact that most of my properties were cash flow negative at the time – and yes, I have had second thoughts about selling all my rentals

[4plexowner]

davelj, thanks for sharing

what’s “short term” vs “long term”?

what’s “investment” vs “speculation”?

these are excellent questions that everyone needs to resolve for themselves

I set out to build a real estate empire and got way-laid by a real estate bubble – I got sucked into the bubble briefly but then realized I was speculating in real estate and NOT investing [there is a huge difference – an investment (typically) sends you a check every month – if you are writing a regular check to support your real estate ‘investment’, you might ponder the difference between investing and speculating]

for investing, I like to think in terms of secular trends (10-15 years) – IMO a person only needs to make three or four good investment decisions in their lifetime, if:
1. they are investing in secular trends, and
2. they ride the trend until it ends

back in 2002 when I became aware of the building RE bubble and was deciding what to do about it, I identified these secular trends:
– stocks: 1999/2000 through 2015/20 – down [remember the Dow was heading down until 9/11 conveniently provided a reason to pump lots of money into military spending, homeland security, etc – basically the WPA and CCC with a modern day twist]
– real estate: 2002 through 2015/20 – down, and down hard [yes, I have been expecting RE to die a painful death since 2002 – it amazes me that we have made it this far without a serious crash – of course, if I had $23.7 trillion of the taxpayer’s money I could fake a pretty good recovery too]
– precious metals: 1999/2000 through 2015/20 – up, and up dramatically

based on these trends I started selling my real estate and investing in the precious metals

this strategy is working pretty well for me so far – out of real estate by 2006 and into metals – I bought silver around $5/oz and gold around $475/oz (and encouraged everyone on this site to do likewise!!! they are at $16/oz and $1118/oz today) – I’ll hold my gold coin and the three silver ones until 2014/15 or so and then see what secular trends are doing at the time – I expect I will be switching out of the metals and back into real estate or perhaps equities

I believe my original intent of building a real estate empire is along the lines of what you are saying – ie, long-term investments that throw off cash

when the bubble occurred I decided that the short-term capital gains I had in hand were more valuable than the POSSIBILITY of long-term cash flow and appreciation – this decision was made easier by the fact that most of my properties were cash flow negative at the time – and yes, I have had second thoughts about selling all my rentals

[Author]

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