The numbers I used are from the S&P 500 with the dividends reinvested, but I'm happy to accept numbers for any basket of at least 200 companies, ideally one where it is possible to buy a single low cost index fund which invests in all of them at once.
It is true that stocks drop out of the S&P 500 or are added from time to time, but I'm talking about the actual returns a person invested in an S&P 500 index fund would receive over my lifetime, including turn over of companies, a process that wouldn't require any effort on their part.
The Overnight Strategy doesn’t require a lot of efforts either. You can write an app and let the computer to do the work.
But that’s not the point.
The question I’m addressing is what constitutes a fair comparison when we compare gold’s with stock’s performance.
Good performing/getting big gets in, bad performing/getting small gets out: as long as this mechanism is in place, it doesn’t matter if we are talking about a 30, a 300 or a 3,000 stocks basket.
(The dividends aspect is also irrelevant.)
Let’s consider the S&P 500.
Out of the 500 originals, only 60 companies are still in the Index.
So, in my view, if we are going to compare the performance of that gold bar with the performance of the S&P 500 since inception (1957), I would consider to be fair to compare the performance of that gold bar vs. the performance of those initial 500 stocks.
On the other hand, if - stocksside - the basis of comparison is allowed to change (good performing/getting big gets in, bad performing/getting small gets out), then - goldside - the basis of comparison should be allowed to change too.
I mentioned the so called Overnight Strategy not because I wanted to advise to invest according to it.
It was just an example of what, in my view, could constitute the goldside basis of comparison when comparing „gold“ with „stocks“, if with „stocks“ one means Indices whose composition changes more or less regularly according to the rule: good performing stocks come in, bad performing stocks get out.
If you feel the argument from this zerohedge article is accurate, why not adopt this strategy?
Maizeman, really?
Speaking about fairness: The USA has been the economic superpower for a century now.
I have seen that more than once when people compare gold’s with stocks’ performance, with „stocks“ they mean US stocks.
That happens also in forums based outside of the USA.
So, now I'm wondering, is it fair to compare gold’s performance with the performance of the stocks of the best performing economy worldwide?
After all, not everybody lives in the USA, isn't it.
In the last century, not everybody could buy US stocks, even if he wanted to.
Even today, in some countries there are hindrances at it.
So, for example, for Mexicans, wouldn’t make more sense to compare gold's performance with Mexican stocks? For Russians, wouldn’t be more interesting to compare gold's performance with Russian stocks? For Filipinos, wouldn’t be…
Gold is designated by Basel III as risk-free. Stocks are not.
Under Basel III, Greek, Spanish, Portuguese, and Taiwanese government debt (among that of many other nations) is also designated at risk free.
That doesn’t matter Maizeman.
My point is, gold is designated as risk free, stocks aren’t.
My point is, comparing gold’s with stock’s performance, the fact that gold is less risky, or even risk free, doesn’t get factored in.
Gold holders have a benefit which stocks holders don’t have, but this benefit doesn’t get factored in when comparing gold's vs. stocks' performance.
I find it unfair to gold.
Also, as I said, gold is money, a currency.
Stocks are not.
Gold holders have not only an asset. They have money too. Stocks holders don’t.
This advantage of the gold holders doesn’t get factored in when comparing gold’s with stocks’ performance.
This too, I find unfair.
My point is, comparing gold and (e.g.) stocks, shouldn’t be reduced to comparing performances.
Comparing gold and stocks only under the point of view of their performance, is reductive, because it leaves out aspects which are important when assessing investment strategies.
If we consider the performance as the only, or the principal way to compare gold with stocks, in my view it's unfair to gold.