Today’s markets ended to the down-side mostly. No one can say if this is the start of bigger decline. My strategy will be to hold through any decline and probably add to positions. Stocks still look cheap. I may enter some orders to trim positions a little if they rise and buy a little if they fall. But for the most part I will be standing pat.
Warren Buffett has a new article in Fortune Magazine, looking at cash, stocks and gold as investments:
http://www.cnbc.com/id/46328808?__source=RSS*blog*&par=RSS
This is REQUIRED reading. (Drop what you are doing and read it right now, if at all possible) The writing is so plain, the logic so clear. He says stocks are safer than cash, bonds or Gold in the long run. Nothing in the article surprises me because I have studied what Buffett has written and there is nothing fundamentally new here, although it is packaged up nicely. And it is nice to get the confirmation that nothing has changed that he sees stocks as better than bonds today (Gee, who’d a thunk it with stocks having dividend yields over 2% on average, (and constantly growing) and earnings yields of around 8% with growth potential and with even long term government bonds returning under 3% with zero growth and cash and short term bonds returning nothing. On top of that stock returns are taxed less heavily!)
One place where gold bugs go wrong is they view an investment in stocks as an investment in a paper fiat currency. Not true, stocks are measured in money but they represent investments in corporations that produce something of value. That value is largely independent of the currency it is measured in, especially in the long term. Gold bugs also fail to notice that Gold is also measured in dollars and not the other way around.
My own analysis has shown the same thing as Buffett notes — that stocks wallop gold and cash and bonds in the long term. It’s why I have “foolishly” been close to 100% allocated to stocks since I started invested. (It’s not for everyone, but it’s done well for me).
For example: Asset Performance and Asset Allocation Real Growth Scenarios