Posted by The Famous Grouse on January 01, 2019 at 10:12:36 from (97.116.27.81):
In Reply to: Investments 2018 posted by MarkB_MI on January 01, 2019 at 04:56:30:
The whole "guns and gold" investment "strategy" (if you can call it that) has more holes in it than a rusty bucket.
The main problem is that you, as an individual, cannot liquidate guns easily, quickly, or without cost that erodes your value.
Let's say you had 10 of Brand X gun that you wanted to liquidate and take your profits. First, you'd have to find buyers and that would be a slow process and for 10 units, would probably take months. Also, buyers are very hesitant to pay "rack rate" for guns bought from private individuals, so buyers will almost never buy NIB guns for the same as what they can buy them for from a reputable retailer.
Secondly, the cost of sale (gun site listing fees, etc), packing, shipping, etc all erode your profit. You also would have to store and if you're smart, insure all those "investment" guns, all of which has a cost.
Then there is the opportunity cost. What OTHER investment could you have made with the money you had tied up in guns. Had you bought guns 5 years ago anticipating another "Sandy Hook" panic, you'd still be waiting, but had you invested that money in an S&P fund even counting this "down" 2018 year, you'd still be way, way, way ahead.
Also, guys who claim to be fans of this strategy almost never seem to sell. They're always looking to time the market and sell at some future mega peak time that they claim they will see coming and sell at the top of the top. Hmmm. If stock investors can never seem to do this, how come we believe gun investers could?
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Stock prices are all the same--they are based on speculation of future falue. Every one of them. Doesn't matter if they produce steel, oil, or nothing you can see of feel. Value moves up or down based on precieved FUTURE worth.
Facebook, Twitter, and Google have high values because they sell advertising and user data. Those products are very popular right now and it's unlikely this will end anytime soon.
Warren Buffet always looks at the "moat" that surrounds a stock. How much market share would say, Coca-Cola have to lose before it made even a dent in thier profits? A lot. What is the likely hood of a competitor being able to capture that much market from Coke even over say a decade? Next to none.
Apply that to Google. How likely is it that a competitor would emerge that will take away even 10% of Google's daily user base away? There is next to zero chance of this happening.
It's not about the value of what a company owns or produces, stock prices reflect the market's speculation of future performance and value.
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