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It was the best of times for dividend investors

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dividend In my last post, I discussed the complicated world of dividend payments.

(It may help to refer to my last post on dividend-payers and its predecessor before reading this new one.)

Continuing from the previous, when it comes to dividend payments, what we have to remember is:

Since the dividend payments have already been paid and taxed (if held outside a registered account), then your adjusted cost base (ACB) for accounting purposes, and, more importantly, for paying taxes on your investments, already takes the dividend into consideration.

What the charts and ACB don’t tell you

When you look at charts, since they don’t add the dividend amounts on to the listed return, it looks like you made less than you did. You have to take the return on the investment plus the dividend it paid to get a real picture of your investment.

In a great year, like this last year, it doesn’t matter as much, but in years where the stock only appreciates a little, say 1 or 2 per cent, a 4 per cent dividend looks great.

If you bought 100 shares, originally, and reinvested your dividend payment each time it was made, those payments will become part of your ACB. Let’s use a very simple example to review how this works.

Okay, one more time, from the top

If you held 100 shares and received four dividend payments that equalled 1 share each, you’d now hold more shares:

100 + 1 + 1 + 1 +1 = 104 shares

If the share / unit price were $62, your investment would be: 104 shares x $62 = $6,448. The dividends paid in 2013 will be taxable. In the example above, three of the dividend payments will be taxable on your 2013 tax statement while one of them would have been paid the year before since it was paid in 2012. (Again, this is only true if the investment is held in a non-registered account.)

In Paid for faith and paid to wait: Have you thought about this regarding your dividend paying investments?, I discussed what happens with dividend-paying stocks. Key is the way dividends are accounted for (in a non-registered account, e.g., outside of an RRSP or TFSA).

When a dividend is paid (refer back to the example above), it becomes part of your cost when reinvested because you have bought new shares or units. So, in the above example, where you hold 104 shares, all of those shares are you’re ACB.

$6,448 becomes your ACB. Not the $6,200 of your original investment. The $248 of dividend payments are added to your cost.

This works in your favour at tax time:

If held outside of a registered account, the dividend payment is tax preferred and you’ll pay a lower rate of tax than if it were normal income. For example, you’ll pay a higher tax rate on your salary, on GICs and other deposit investments which pay out normal income.

Let’s take a quick look at history … Way back in December 2011, I posted about the favourable climate for dividend-payers – especially U.S. dividend stocks. You’d be a happy investor right now if you’d made investments in quality dividend stocks back then — U.S. or Canadian.

It was the best of times (for dividend investor returns): the irrefutable metric of the past

As always, the future is unwritten, but the past is fact because we can measure it. I began this series of posts a while ago. If we update it to the time of writing, we find:

One of the most conservative of indices, the Dow Jones Industrial Average (DJIA) returned approximately 33 per cent since that time. The broader S&P 500 returned about 47 per cent (although the index does have a lower dividend payout and is somewhat ‘growthier’). Still, it was indeed one of the best of times for dividend-payers.

Royal Bank? About 62 per cent.

Even more impressive? Those returns quoted above don’t include dividend payments. Your return including those payments would’ve been even higher.

ry inx djia

Here’s a chart showing dividend activity for Royal Bank over the same period of time:

ry div

For Canadian investors, it might be interesting to consider that the Canadian dollar dropped in value over this time as well. If you held U.S. investments, the strength in the U.S. dollar added to your return on those investments. Since its recent peak in July 2011, the Canadian dollar has dropped from $1.05 U.S. to about 90 cents U.S. (a drop of approximately 16.7 per cent if you want your 90 cents to grow back to 1.05).

The change in currency added about 6 per cent to the DJIA’s return for Canadian investors and about 8.6 per cent to the S&P 500.

Not bad.

Want to contact me? Go here.

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This work and all work on this blog is licensed under a Creative Commons Attribution-ShareAlike 3.0 Unported License.
NB: Royal Bank stock used for illustrative purposes.

Image: Flickr, Daily Dividend.

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Written by johnrondina

February 24, 2014 at 12:22 pm

Paid for faith and paid to wait: Have you thought about this regarding your dividend-paying investments?

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In Help! I can’t understand if I’ve made money with my dividend-paying investments! I blogged about the difficulty some investors have with dividend payments. What are dividends? How do they function?

Using the dividend data from my previous post …

If I made money, why doesn’t it show?

It does. You have to understand what’s happening when you get paid that dividend.

(You might want to review the previous post above.)

Here’s what it looks like:

dividendEach time your dividend of .63 cents per share is made (.63 cents x 100 shares = $63), your $63 dividend payment is subtracted from the share or unit price of the investment. If the share price was $62 when the dividend was issued, and the dividend was issued at .63 cents then the share or unit price is now:

Share price – dividend issued

New share price:

$62 – .63 cents = $61.37

The new share per unit price is $61.37 ex-dividend (after the dividend payment is made).

Paid for faith = Paid to wait

Some people have trouble understanding this change in the stock or unit price of the investment. The point is, the company has paid you for your faith in investing in it. (In our time of give-it-to-me-right-this-second, faith in the long-term future is a sadly diminished concept.)

The company has also paid (most probably) millions of other shareholders, so the share or unit price must go down by the amount paid out as a dividend. This affects your Adjusted Cost Base (ACB).

The dividend has been paid to you. You’ve already received it. It’s your choice whether you reinvest it into that same investment (over the long-term a good strategy) or take it in the form of cash and buy another investment with it — or spend it. However, spending this cash goes against one of the mantras of investing, which is, reinvesting your capital for the long-term.

What are your goals?

Cost is relative

Because you were paid the dividend amount, and if that amount is held outside of a registered account, e.g., an RRSP, the dividend payment becomes part of your cost:

$62 + a dividend payment of .63 cents as above makes your ACB: 62 + .63 = $62.63.

If you received four dividend payments of .63 cents that would be 4 x .63 = $2.52. Now your ACB would be $62 + $2.52 =  $64.52.

Time in

This is where people get confused. Because the ACB includes the dividend payouts, the payouts that are recent skew your cost base. The new dividend investment hasn’t had time to make much money, and so, it reduces the “look” of the performance of your shares.

Sometimes, especially if it’s a new investment, it looks like you’ve made less than you have.

Remember:

  • That dividend payment may add to your ACB, but it is money you “made”, money you didn’t have before

When you have a newer investment or in a declining market, this effect is amplified. But if you have a quality investment, this is short-term thinking. Resist short-term thought.

Declining market? New investment?

  • Your dividends are being paid out, and you’re buying at cheaper prices if you’re repurchasing stock / getting new units of a fund during a correction (the difficulty is trying to understand when the correction will end)
  • With a new investment, you haven’t had much time to profit, so the dividend payments are going to add to the ACB and make it look like you’ve made less than you have unless you remember you received that dividend payment every month, quarter or year
  • If you project out over three, five or ten years, you get a lot better idea of how those extra shares you reinvested in through your dividends increased over time (assuming an increasing market)
  • Even if you received your dividend as cash, you still got something you didn’t have before

Think like a business owner when it comes to your investments.

Life, business, investing – it all moves in cycles. Have the patience to wait, and the wisdom to filter out hype and noise.

Like the recurring circle of kids on their way back to school in fall, there are certain near-immutable laws and cycles that investors must consider.

Whatever the stock does, the dividend payment’s in your pocket

When investors sit down to look at their statements, even if their accounts are registered, the ACB appears to make it look like they haven’t made money in the short-term. But often, they have.

Remember, if the investment paid out a dividend this year of, say, 4 per cent, you made that 4 per cent. The investment would have to drop 4 per cent (of course, there are management fees to mutual funds and ETFs, and you have to subtract those*) for you to break even.

To sum up:

  • Remember, the share price will be reduced every time a dividend payment was made by the amount of the dividend payment (but you still received that payment in cash or through the purchase of more shares)
  • You now own more shares because of the dividend payments
  • Because you own more shares, if the price of the investment continues to go up, those additional shares will increase in value

It’s important to note that during real dividend payments (rather than our example), there may be more variation because of the numbers involved, but this example will give you an idea of how dividend payments operate and what a stock or unit price looks like ex-dividend (after the dividend has been paid).

In a year like this last, the returns have been excellent (the Dow Jones Industrial Average and S&P 500 are up over:

  • 26 and 30 per cent respectively since the low of June, 2012, and that’s without including dividend payments**).

You can expect to have made money even on some of the new money invested through the new dividend payments into new shares or units.

In my next post in this dividend series, get an example of what this looks like, including a chart.

Want to contact me? Go here.

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This work and all work on this blog is licensed under a Creative Commons Attribution-ShareAlike 3.0 Unported License.

Image: Flickr, Daily Dividend.

* Mutual funds subtract these fees before flowing gains to investors
** At the time of writing, and, in U.S. dollars

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Written by johnrondina

September 19, 2013 at 4:05 pm

Help! I can’t understand if I’ve made any money with my dividend-paying investments!

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dividend

Having difficulty understanding if you’ve made money with a dividend-paying investment?

So many investors look at their statement when it arrives and think:

I haven’t made any money! (Cue gnashing of teeth.)

But is it true?

Let’s say you hold investments that are of a dividend-paying nature. How do they operate?

Well, whether you’re investment is a mutual fund, an ETF or a stock, if it pays dividends, and you don’t really understand how dividends work, you’ll be confused.

Paid to wait

First, it’s important to separate your original investment from your dividend payments (distributions).

Dividend payments might be:

  • Monthly
  • Quarterly

or,

  • Yearly

Most dividends come in quarterly payments.

In this example, I’m going to use Royal Bank, a widely-held Canadian bank stock. It doesn’t matter what dividend-payer you use. It’s also the same with an ETF, a stock or a mutual fund. It’s only the terminology that changes (e.g. shareholder or unitholder).

Royal Bank pays a dividend of .63 cents quarterly. If you hold 100 shares of Royal Bank, you’ll receive a payment of approximately .63 cents four times per year per share.

Why “approximately”? Because depending on the health of the company, it may raise or lower the dividend. For example, Royal Bank raised it’s dividend payments this year. It’s first two dividend payments were .60 cents, and the last two were .63 cents.

To make things easy, let’s assume Royal Bank had made four dividend payments of .63 cents:

4 x .63 = 2.52

In my example, the dividend payment would be $2.52 per year. If the stock were valued at $62.00, that yearly dividend payment would be equal to 4.06 per cent (or one year’s dividend payments). Our example is very close to Royal Bank’s dividend yield (currently 3.94 per cent).

Let’s imagine the Royal Bank illustration above was a mutual fund. If the fund paid a dividend of $2.52, the dividend payment amount would be subtracted from the unit price each quarter.

Each time the dividend was paid (.63 cents), the unit price of the fund would be subtracted by the dividend payment.

Why?

But wait! Wasn’t there a dividend payment?

Because your Adjusted Cost Base (ACB) changes when dividends are paid out.  If the unit price of the fund did nothing, for example, ended the year at the same price it began it, your investment would look like it hadn’t made any money. Superficially, at least.

But it would have, because, when you receive the dividend, you get more shares / units. Your 100 original shares will increase in number.

Didn’t that fund pay $2.52 for the year? And wasn’t that payment supposed to be 4.06 per cent? And so, didn’t you, as an investor, make over 4 per cent on your investment?

Yes.

And every time the dividend was paid out, didn’t you get additional shares in your investment?

Yes.

But the four dividend payments, when made, count as dividend income if they’re held outside of a registered account. The dividend is reinvested into the fund. So, when your payment of .63 cents per share is made, for accounting purposes, it’s considered new money and a new investment.

In a future post, I’ll give you an example of what this looks like, and a key error less-experienced investors make in understanding their investments.

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This work and all work on this blog is licensed under a Creative Commons Attribution-ShareAlike 3.0 Unported License.

Image: Flickr, Daily Dividend.

Written by johnrondina

August 27, 2013 at 5:35 pm

One stock is the loneliest number when it comes to investing

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recordThe U.S. markets have had a great run this year. They may be entering a phase of correction as I write.

Some stocks affect markets more than others.

Falling back to Earth

Remember Apple — everybody’s darling? Have a look at a post  from back in April, 2012.

What goes up spectacularly, can come down spectacularly

Over one year, Apple fell nearly 40 per cent from its peak. While Apple may have done very well long-term, if you held Apple over the last year, you’re investment dropped 40 per cent from its high. It acted as a drag on the S&P 500 and the Nasdaq just as it lifted both during its run. That’s 40 per cent of your investment or very nearly the amount the broad markets came down during the financial crisis, an amount that caused many investors to rethink their risk tolerance.

One, is indeed, the loneliest number

You should never hold just one stock, no matter how well it’s done. Sure, you can do very well, but what some forget is that your risk goes into the stratosphere with your investment.

Apple as case history

Apple’s downturn presents a strong argument for diversification.

Steve Job’s heirs were being advised to sell Apple and diversify even before Apple hit an all-time high. But that story didn’t capture much attention.

One is the riskiest number

The reality is, that in investing, one is the riskiest number. There’s a reason most investment professionals own anywhere from 30 to 300 stocks or more in a broadly based portfolio. Broad indices may even go as high as 500 stocks (S&P 500) or 1,000 or more (Russel 1000).

Grow slow**

And this is why diversification is so important. While it’s true everyone’s a winner while they’re winning, it’s also true that spectacular runs in individual stocks can come to an end.

Apple’s future? Unknown. But principles of diversification are well-known, tested over time, and retested. There are aberrations, but even better, investors sleep at night when they know their risk tolerance.

As Apple stalled, the broad market accelerated

We may be overdue for a correction. U.S.-based indices like The Dow Jones Industrial Average (DJIA) hit a record while the broad S&P 500 fell from its nominal high recently. Both indices have performed very well.

Both indices were bargains after ten years of relative underperformance, especially compared to the Canadian market and a soaring Canadian dollar. After the financial crisis, and the ensuing market correction, few wanted U.S. stocks (or any equities). But they were extremely cheap.

Is big better?

As money came out of Apple, the broad markets took off. We’re not just talking big … Apple had reached monolithic proportions. Articles like this are often a warning to investors. A warning that often goes unheard.

Can’t you just see Tim Cook breaststroking through cashmoney? I can.

— The Atlantic

Was Apple absorbing a lot of investment capital? Considering the huge cash position Apple held (over $100 billion U.S.) was that capital being used well or was it being used as a buffer against the inevitable slide in Apple stock?

Investors looked out at investment opportunity, increasing competition for the iPhone and decided to take profits and put their money in more companies in different businesses. After all, while some may argue the opposite, does any country create lasting success through the overwhelming dominance of one company in its markets?

The history of antitrust law would say no. You be the judge.

You’re risk tolerance may be severely tested only once every ten years, but when it is, what you thought you knew about yourself can change as fast as the passage of that ray of light that just went by but left the sun eight minutes ago.

Click here for more about bonds/fixed income investments.

Click below for more about asset allocation and reallocation strategies:

Get the balance right

A simple way to arrive at the right asset allocation for your portfolio

Plan like a pension fund manager when it comes to your investment portfolio

Let’s think about assets

Asset allocation: Diversification is king

Click here for articles about dividends/dividend-payers.

Click here for a collection of articles about investing.

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* Based on an average basket of Canadian dividend-payers

** Recent activity in gold adds fuel to a philosophy of owning dividend-payers during tough times, the dangers of volatility for investors who haven’t diversified and the perils of overweighting one speculative sector or stock, no matter how “safe” the crowd thinks it is

Written by johnrondina

April 8, 2013 at 2:35 pm

Is it better to have invested, and lost, than never to have invested at all?

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Well …

It certainly helps you achieve your investment goals if you own investments that have a chance of getting you to your destination.

Take a look at the following charts and ask yourself two questions:

  • If you had bought during the major dips, would it have benefited you?

and

  • How would you have done with your money in low interest instruments according to the charts below? *

Example fund vs. 1-year GIC

Example fund vs. 5-year GIC

It’s clear that the most conservative investments wouldn’t have served you as well since the inception of this fund. What investors would do well to remember is that GICs lock your money in until maturity while mutual funds, ETFs and stocks are more liquid, generally.

Not to mention:

  • If you had bought during the dips

and

  • If you had rebalanced regularly

… you’d have done better than the chart shows since you would have lowered your cost or ACB and generally bought lower and sold higher.

So …

Do you have a plan, a strategy?

What is it?

Remember a few weeks ago when the news about Europe was so bad that optimism seemed naive?

I’m paraphrasing myself from a previous post. I talked about learning to harness your fear. There are always reasons you can find for Armageddon if you look hard enough.

People want stability. At times, markets and the business cycle are anything but stable. Above, you can see that during the worst stock market correction in most of our lives, an example of a balanced, dividend-based portfolio outperforming the most conservative of investments, GICs, by  four times or more.

When the doom and the gloom gets really thick, many investors feel paralyzed. But that’s exactly when great investors look for opportunity.

During the doom and gloom, markets often decide to have a good bounce.

Isn’t that counter-intuitive?

Actually, it’s pretty normal. If there were no walls of worry to climb, there’d be no bull markets. In “Wait a minute. There’s some good news re the markets?” I blogged about how investors often miss the opportunity in the end-of-the-world-as-we-know-it scenarios.

I posted some stark stats in “Why you should consider new investments now”.

Since we’re supposed to be strategic about long-term investing, let’s ask ourselves a question again:

When the market takes a substantial dip, is there more chance that it’ll rise or keep falling on average?

In “Don’t Panic”, I also talked about managing fear while investing. Learning to harness your fear is important in sports. Imagine you’re taking a penalty. It isn’t easy to stand there and score in front of 70,000 people.

Why should it be any different when you invest?

What’s the market going to do?

No one knows. There are a lot of educated guesses, research, charting, but no one knows.

Accept it.

Just as, if you decide to start a business or enter into any kind of relationship, there’s no 100 per cent satisfaction guarantee.

Business, economic news, the process of investing, continues to flow. It’s a river. There are rapids. There are waterfalls.

There may even be a couple of Niagaras out there.

But if you look at history, you’ll see that there were always those who pushed and went further. For every time you encounter end-of-the-world-scenarios, you’re going to see that someone steps up, looks at the recent correction in the market and says:

Hey, there may be some value here.

Accept the psychology of the market. But get a plan.

Is the bad news over?

Here’s what I said in that previous post:

We’ve come through a tough time. We’re not out of the woods yet, but if you’ve been sticking to a sound investing plan, you’ve taken advantage of the weakness in the market.

The bad news about being an inactive investor in 2011

If you had been sitting in cash only:

  • You missed a very nice rise in the bond markets

and

  • A great opportunity to reallocate investments to stocks

You might have taken advantage of a great time to buy equities at lower prices and participated in the rise of the bond markets.

Or, you might have asked the more unlucky question:

What happens if the world ends?

It might be better to ask:

What happens if I think strategically about my investments?

What happens if the world doesn’t end?

Want more information?

Click here for more about bonds and fixed income investments.

Click below for more about asset allocation and reallocation strategies:

Get the balance right

A simple way to arrive at the right asset allocation for your portfolio

Plan like a pension fund manager when it comes to your investment portfolio

Let’s think about assets

Asset allocation: Diversification is king

Click here for articles about dividends/dividend-payers.

* Example fund chosen out of large bank balanced funds with a dividend bias. Fund used purely for illustrative purposes with a time period of less than ten years since the effect of the financial crisis should have been greater during this period.

Chart source: Globeinvestor.com

You don’t need to listen to Warren Buffett (if you’ve allocated your investment portfolio properly)

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Warren Buffett came out and highlighted the risk in bonds recently. He pointed out that long-term, stocks have a lot less risk than currency-based investments like bonds.

Stocks or bonds? Maybe both

Backing Buffett, the S&P 500 has had it’s best February since 1998. The S&P/TSX 60 has hit a five-month high.

Sadly, RRSP contributions are hitting lows just as the markets have taken off.

There are many reasons RRSP participation has declined: difficult economic times, fear generated by stock market volatility and the effect of demographics are just a few.

If some investors are avoiding the stock market because of fear stemming from the financial crisis, it’s cost them this year. If this becomes a long-term trend, it will cost people in retirement.

In “Bonds: Why you should love the unloved investment”, I discussed the role bonds play in a diversified, balanced portfolio within the context of stock market corrections.

Since the financial crisis, investors have seen a bull market in bonds as people bought “safer” investments like bonds.

But bonds tend to rise when interest rates decline. If interest rates don’t continue to decline, the return on bonds will be limited.

Considering today’s already low rates, is it likely that they’ll continue to decline?

If interest rates go up, the returns will become negative, and we might see the first correction in the bond markets since before the financial crisis.

Bonds vs. the S&P/TSX 60: The return of equities

Dom Grestoni of Investors Group recently said: “Rates are going to start rising, so if you commit to a 20-year bond at 2½% and the market rate goes up half a percentage point, you’re going to part with 30% of your capital.

We’re seeing valuations that are now discounted relative to the past 20 years, and interest rates are at record lows … Would you rather lock into a 10-year government of Canada bond paying 2.1%, with no prospect of growth, or buy a high-grade dividend-oriented stock, like a bank or utility, with yields above 4% … and that dividend is going to grow year after year.

Investors were underweight bonds as stock markets went from outperforming to underperforming during the financial crisis. Many may now be overweight bonds.

Both Buffett and Grestoni are trying to alert investors to this danger.

The mania is the message

Buffett would probably be happy if you didn’t need to listen to him. Some wise investors are already well-prepared.

How can you be one of them?

What Buffett was trying to counter are the manias that investors inevitably fall for. Sadly, most investors go for whatever investment vehicle has been getting the majority of cash flows.

Too many investors arrive late in the game.

Bad news burnout

The barrage of bad news has influenced investors: events in Europe, and other withering news grabbed all the headlines. Have people noticed that news has gotten more positive regarding companies, Europe and the outlook for stocks?

There are still threats amongst the opportunities. Financial news from Europe and the U.S. is mixed though better than it was.

Bonds?

There’s nothing wrong with holding bonds in a properly diversified portfolio. In fact, many managers hold bonds in their portfolios.

As mentioned in “Bonds: Why you should love the unloved investment”, many pundits were calling for a bond correction last year, and it turned out to be a great year to hold bonds.

But the same may not hold true in the future.

In Part Two, I’m going to discuss why having a plan benefits you when it comes to asset allocation within your portfolio.

Chart source: Globe Investor

Flash in the pan or long-lasting hedge? Buffett speaks out on gold, again

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Will all the gold that glitters glitter less?

Warren Buffett tossed some nuggets of wisdown into the stream again.

In “Gold Riot”, I discussed gold bullion, gold stocks and Buffett’s opinion on the metal.

Despite gold’s excellent performance of the last ten years, it’s been one heck of a ride. Soaring and then plummeting, gold has shown investors that when it corrects, it corrects with a vengeance.

Buffett sees gold as an unproductive asset. He believes stocks are the more “productive” assets and will “prove to be the runaway winner” trumping bonds or gold over an “extended period of time”.

He also says stocks will be “by far the safest” of assets.

Bonds, says Buffett, need a “warning label”. He believes they’ll fall victim to inflation and taxes.

Risk is a slippery slope. While many investors don’t realize it, so-called “safe” investments like GICs or U.S. Treasuries have risks, too. At the moment, Buffett sees bonds (including other currency-based assets) as “dangerous”.

Still, portfolios need some bonds depending on the investor’s risk tolerance. Buffett’s company, Berkshire Hathaway, holds bonds for liquidity issues.

Investors who have been heavy in bonds have had a great year, but such returns may be harder to come by in the future.

Buffett says:

… owners [of gold] are not inspired by what the asset itself can produce — it will remain lifeless forever — but rather by the belief that others will desire it even more avidly in the future … bubbles blown large enough eventually pop.

To see Buffett’s interesting metaphor on gold, see my blog from last December, “Gold Riot”. Famously, Buffett compared gold to stocks and farmland.

Fondling the cube

Buffett again emphasizes his position on gold:

A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops — and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.

If you didn’t check the link above, do it now for a more complete picture of Buffett’s philosophy.

Buffett highlighted the mania in gold near it’s peak. Gold has recovered since it dropped, but Buffett’s still not a big fan.

In “Gold Riot”, I pointed out, agreeing with Buffett, that it would be wise to be cautious.

The new boss different from the old boss?

Buffett called the tech bubble early over ten years ago. Many made light of his opinion then, saying the “new economy” no longer needed to play by the old rules.

But the “new bosses” turned out to be wrong and the “old boss” turned out to be right.

Hype and speculation eventually led to a blow out. Buffett was early, but he was right.

With respect to gold, if an investor interested in gold had held off during its spike last year and waited for the correction, they would have:

  • Had a great buying opportunity

and/or

  • Avoided a big downturn

Gold has its place in a portfolio, but there are some great points to remember about investing in bullion or gold stocks.

As with any other investment – perhaps even more because of its volatility – hype and value are part of the equation.

Gold will play its part in the next few years, but do investors understand the risks associated with investing in gold?

See Buffett’s article in Fortune

Sprott diversifies:

Sprott, volatility and gold

Peter Hodson agrees on gold

Click here for more about bonds and fixed income investments

Click below for more about asset allocation and reallocation strategies:

Get the balance right

A simple way to arrive at the right asset allocation for your portfolio

Plan like a pension fund manager when it comes to your investment portfolio

Let’s think about assets

Asset allocation: Diversification is king

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