Comments on: What’s Up With Our Money? http://MadMoneyMachine.com/2008/04/06/whats-up-with-our-money/ BEST BUSINESS PODCAST NOMINEE 2006 and 2007. Paul Douglas Boyer takes on Wall Street with complete laziness and reviews the Mad Money recommendations of Jim Cramer. Plus: Money-making idea segments like Guru Roulette, Tools in the Crib, and Portfolio Smackdown. Subscribe to get the lastest episodes! More info at MadMoneyMachine.com. Fri, 20 Jun 2008 20:44:25 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: ReadBuySleep http://MadMoneyMachine.com/2008/04/06/whats-up-with-our-money/comment-page-1/#comment-31485 ReadBuySleep Tue, 08 Apr 2008 16:26:09 +0000 http://MadMoneyMachine.com/2008/04/06/whats-up-with-our-money/#comment-31485 I find all this Gold talk troublesome. For the average American, who buys Index Funds, what is this Gold Fever supposed to mean? Are we to start buying Gold at this point in time? One look at the 10-year price chart of Gold tells me NOT to do that. If Gold were to go back to its price just 3 short years ago, one would lose 50%. 10 year gold chart: http://www.goldprice.org/gold-price-history.html#10_year_gold_price The alternative is, I call my Congressman and start lobbying for going back to the Gold standard. Trouble with that is, for every expert that likes the Gold Standard, there will be another equally reputable expert who DOESN'T: http://web.mit.edu/krugman/www/goldbug.html In conclusion, I'm sticking with my self-made SMILER portfolio of Index funds and trusting in the Greenback. :-) I find all this Gold talk troublesome. For the average American, who buys Index Funds, what is this Gold Fever supposed to mean? Are we to start buying Gold at this point in time? One look at the 10-year price chart of Gold tells me NOT to do that. If Gold were to go back to its price just 3 short years ago, one would lose 50%.

10 year gold chart:
http://www.goldprice.org/gold-price-history.html#10_year_gold_price

The alternative is, I call my Congressman and start lobbying for going back to the Gold standard. Trouble with that is, for every expert that likes the Gold Standard, there will be another equally reputable expert who DOESN’T:

http://web.mit.edu/krugman/www/goldbug.html

In conclusion, I’m sticking with my self-made SMILER portfolio of Index funds and trusting in the Greenback. :-)

]]> By: wizkid http://MadMoneyMachine.com/2008/04/06/whats-up-with-our-money/comment-page-1/#comment-31350 wizkid Mon, 07 Apr 2008 16:43:54 +0000 http://MadMoneyMachine.com/2008/04/06/whats-up-with-our-money/#comment-31350 I think going back to the Gold standard is probably not realistic. Better to discuss the investment strategies relative to inflation (as the video does a great job of demonstrating with fuel and cars). Gold is only one hedge against inflation. Decade Assumption: http://inflationdata.com/Inflation/images/charts/Articles/Decade_inflation_chart.htm If you assume the next decade 2010 - 2020 matches the 1980's of 5.55% what investment strategy would you take? Long Term Trend Assumptions: http://inflationdata.com/Inflation/images/charts/Annual_Inflation/annual_inflation_chart.htm Are we 4 years (starting in 2004) into a 15 year trend of rising inflation? If so the target Fed line of 3% or less is now in danger. What inflation assumption should the average investor now use in place of 3%? How about 5%? To complicate it more - Your inflation rate is different than my inflation rate (based on consumption patterns, age etc.). So can we even trust the CPI charts published? Each person should keep track of their own personal inflation (gas, beer, food - you know the staples). And DONT FORGET TAXES!!! Finally the brain teaser- from Edelman's "The Truth about Money". What must you earn to maintain your money's purchasing power at 5% inflation and a 35% tax rate to break even? Answer: See the entire table (Figure 1-18) in his book a> 3.1% b> 4.6% c> 6.2% d> 7.7% e> 9.2% If your answer was d then you better retake the Risk Capacity Survey :) I think going back to the Gold standard is probably not realistic. Better to discuss the investment strategies relative to inflation (as the video does a great job of demonstrating with fuel and cars). Gold is only one hedge against inflation.

Decade Assumption:
http://inflationdata.com/Inflation/images/charts/Articles/Decade_inflation_chart.htm

If you assume the next decade 2010 – 2020 matches the 1980′s of 5.55% what investment strategy would you take?

Long Term Trend Assumptions:

http://inflationdata.com/Inflation/images/charts/Annual_Inflation/annual_inflation_chart.htm

Are we 4 years (starting in 2004) into a 15 year trend of rising inflation? If so the target Fed line of 3% or less is now in danger. What inflation assumption should the average investor now use in place of 3%? How about 5%?

To complicate it more – Your inflation rate is different than my inflation rate (based on consumption patterns, age etc.). So can we even trust the CPI charts published? Each person should keep track of their own personal inflation (gas, beer, food – you know the staples). And DONT FORGET TAXES!!!

Finally the brain teaser- from Edelman’s “The Truth about Money”. What must you earn to maintain your money’s purchasing power at 5% inflation and a 35% tax rate to break even?

Answer: See the entire table (Figure 1-18) in his book

a> 3.1%
b> 4.6%
c> 6.2%
d> 7.7%
e> 9.2%

If your answer was d then you better retake the Risk Capacity Survey :)

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