Author Topic: buy low and sell high alert?  (Read 4701 times)

Stache In Training

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buy low and sell high alert?
« on: June 16, 2015, 08:50:14 PM »
So I was talking about investing to a silversmith today, and she told me how silver is pretty much at an all time low. So I got to thinking, wonder if Vanguard has an index fund for silver and gold and the such.  Well then I find this: VGPMX; which is precious metals and mining companies.  And sure enough it's currently as low as it was after the 08 crash.

So just wondering on people's thoughts about investing in precious metals/ this fund.  Or if Vanguard has an index fund for precious metals, that I'm just missing?  The dividends aren't that great here, but better than just keeping gold in my house, which is of course ridiculous.

I know that this isn't quite mustachian, but it seems like a good chance to 'buy low'
« Last Edit: June 16, 2015, 10:51:42 PM by Stache In Training »

Heckler

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Re: buy low and sell high alert?
« Reply #1 on: June 16, 2015, 11:38:50 PM »
I suspect I already own these companies as a minuscule portion of my total market fund.

MDM

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Re: buy low and sell high alert?
« Reply #2 on: June 16, 2015, 11:54:41 PM »
The price might go up.  The price might go down.  As for "all time low"...from http://goldprice.org/:



Grog

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Re: buy low and sell high alert?
« Reply #3 on: June 17, 2015, 12:20:23 AM »
Sure you can do it. But is not investing with precious metal is always speculation. They have an expected real return of 0 and you don't buy gold for return, but for the diversification and protection  effects  (if you believe in it, see Permanent Portfolio)to your portfolio (in other words, stocks drive returns and you can use bond and in minor part gold/pm to improve overall portfolio volatility.)

So you can speculate and buy pm now, or you can go to the races or casiṇ. Is just not investing and the role of pm and gold is not to generate return.

Old Man Mase

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Re: buy low and sell high alert?
« Reply #4 on: June 17, 2015, 05:35:40 AM »
I think Grog's got it right.  I'm still a relative newbie at investing but I think it's wise to consider that gold/silver does not produce anything, and doesn't have any intrinsic value outside of anyone else's opinion at the moment.  If you want to speculate though, go for it.  You very well could be right in your prediction.

Scandium

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Re: buy low and sell high alert?
« Reply #5 on: June 17, 2015, 08:02:49 AM »
Yes you'd be buying "lower than it was in the past", which of course could still be higher than it will be in the future. If it's low there's probably a reason for that. Do you know what it is? (I don't.) The market doesn't just go up and down randomly, which it almost sounds like a lot of people believe. Buggy whip manufacturer's stocks were probably also at an all time low about 100 years ago..


Gone Fishing

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Re: buy low and sell high alert?
« Reply #7 on: June 17, 2015, 12:18:22 PM »
The charts might not show it well, but the fund is already around 25% off it's 12 month bottom.

I bought the minimum required amount of VGPMX a year or two ago when it looked cheap vs the market as a little experiment. Guess what, it is cheaper now, a lot cheaper and the overall market is higher, a lot higher.  Given how little it is of my portfolio, I am hanging on to it as an example to remind me not to try and pick sectors, and as an exercise in patience to see if it will outperform the market when the (not) so inevitable correction comes.  As others have mentioned metals (granted the index is not bullion) have not historically been a good long term investment.  I will not be buying any more. 

Market timing is psycologically taxing.  Even if you do well, get it 60% right and outperform the S&P, you will still kick yourself thinking about what you "could" have had.  That is one of the beauties of dollar cost averaging, it blurs your purchases and sales so much that removes the psycological burden of getting it "perfect", a real important point for mustachians that thrive on achieving optimization.
« Last Edit: June 22, 2015, 12:32:11 PM by So Close »

Indexer

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Re: buy low and sell high alert?
« Reply #8 on: June 17, 2015, 08:28:12 PM »
Do you make jewelry?  Do you make silverware?

No?  Ok, you don't need any silver then.  Its a metal.  Its a commodity.  When you buy a commodity that has absolutely no connection in any way shape or form to your life you are speculating.   You are now also driving up the price of something that other people/businesses actually do NEED to do stuff.  You are in a twisted way creating inflation for someone else.

Commodities have volatility similar to stocks.  They have long term returns similar to cash or bonds.  As an asset class they are like a garnish.  It isn't on your plate because it taste good or because it provides nourishment.  Its just there to make it look pretty, but really you are now paying for something that is useless. 

VGPMX is not a gold or silver fund.  Its a mining fund.  Some of the companies mine gold and silver, but the price isn't going to move perfectly with either.  Now if the option is buying silver or buying VGPMX I would still buy neither, but the less evil is VGPMX.  It is at least companies, and hopefully they are profitable!  :)

Stache In Training

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Re: buy low and sell high alert?
« Reply #9 on: June 21, 2015, 10:26:18 PM »
Thnks guys, for bringing me back to reality.  Guess I owe it to myself to put more into my total index fund.

patrickza

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Re: buy low and sell high alert?
« Reply #10 on: June 22, 2015, 03:05:55 AM »
Agree with the general consensus here. I don't have an edge over every other commodities trader, therefore I will not try to be a commodities trader (also true for individual stocks, at least in my case).

forummm

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Re: buy low and sell high alert?
« Reply #11 on: June 22, 2015, 08:37:23 AM »
Investors buy commodities because 1) they are gambling, or 2) they think that the asset will be imperfectly correlated with their other holdings and that it will provide a "safe haven" when they exit other holdings (i.e. are market timing). #2 is also gambling that it will be a safe haven because they are hoping that other people will believe it to be a safe haven and push up the price.

Stocks are good to own because they are real businesses that provide real profits (usually) so your long term wealth will increase. Bonds are good to own because you are contractually guaranteed (absent default) to receive more money back for letting someone borrow your money so your long term wealth will increase. Metals are not producing anything useful. It's just speculation.

Cycling Stache

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Re: buy low and sell high alert?
« Reply #12 on: June 22, 2015, 08:48:14 AM »
The easy way to think about this stuff is to ask, "Am I smarter than a trillion dollars?"  There is an entire industry in NYC dedicated to guessing which way the market will go and investing money based on those projections.  What do you think your local silversmith that you happened to chat with knows that $1 trillion in NY doesn't know?  If it were obviously great, that money would be pouring in as well.

I raise this because I prosecute fraud cases, and I'm constantly amazed at how often people will fall for the "unique" opportunity that other investors haven't caught onto yet.  That is a very rare phenomenon in today's age!

arebelspy

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Re: buy low and sell high alert?
« Reply #13 on: June 22, 2015, 09:07:53 AM »
Look at that 15 year flat line from like 90-05.  Even if it does go quite low, how do you know it won't do that for a long period?

Unless you have some special knowledge, it's literally just speculating.  Not for me, but if speculating is part of your plan, as long as you recognize that's what it is, not investing, I'm okay with it.
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NorCal

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Re: buy low and sell high alert?
« Reply #14 on: June 22, 2015, 05:09:28 PM »
As a certified investing genius (tm), I have two predictions of the price of silver that are GUARANTEED to be accurate. 

1.  The price of silver will go up.
2.  The price of silver will go down.

I just can't tell you which will happen first.

Indexer

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Re: buy low and sell high alert?
« Reply #15 on: June 24, 2015, 05:17:49 PM »
As a certified investing genius (tm), I have two predictions of the price of silver that are GUARANTEED to be accurate. 

1.  The price of silver will go up.
2.  The price of silver will go down.

I just can't tell you which will happen first.

Guaranteed?   What if it stays the same? ;)

arebelspy

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Re: buy low and sell high alert?
« Reply #16 on: June 24, 2015, 08:43:55 PM »
As a certified investing genius (tm), I have two predictions of the price of silver that are GUARANTEED to be accurate. 

1.  The price of silver will go up.
2.  The price of silver will go down.

I just can't tell you which will happen first.

Guaranteed?   What if it stays the same? ;)

Forever?  I think it's about as close to guaranteed as anything can be that eventually it'll do one and/or the other (total annihilation of the human race nearly immediately is about the only thing that can make that prediction untrue).
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dungoofed

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Re: buy low and sell high alert?
« Reply #17 on: June 25, 2015, 12:30:44 AM »
If, on the other hand, 1) PMs don't form a part of your investing strategy, and 2) you're human and enjoy a flutter here and there then by all means acknowledge it as a speculative trade, decide how much of your portfolio is for speculative trades and decide the parameters for getting out of the trade before going for it.