Gold Has Outperformed Stocks Over The Past 20 Years

Discussion of the Gold portion of the Permanent Portfolio

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Smith1776
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Gold Has Outperformed Stocks Over The Past 20 Years

Post by Smith1776 » Mon May 18, 2020 4:57 pm

Gold has demolished stocks over the past 20 years. (Yeah, yeah start date sensitivity. Whatever.)

8.69% CAGR for gold vs 5.62% CAGR for the US stock market. Similar standard deviation while gold has had superior drawdown and worst year metrics.


goldvsstocks.png
goldvsstocks.png (197.13 KiB) Viewed 583 times
For the money you can't afford to lose, why would you invest it in anything other than the PP? ???
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whatchamacallit
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Re: Gold Has Outperformed Stocks Over The Past 20 Years

Post by whatchamacallit » Mon May 18, 2020 6:17 pm

Dividends included?
pmward
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Re: Gold Has Outperformed Stocks Over The Past 20 Years

Post by pmward » Mon May 18, 2020 6:24 pm

whatchamacallit wrote:
Mon May 18, 2020 6:17 pm
Dividends included?
Yes that's portfoliovisualizer which takes all dividends and expense ratios into consideration.
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technovelist
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Re: Gold Has Outperformed Stocks Over The Past 20 Years

Post by technovelist » Mon May 18, 2020 6:36 pm

Smith1776 wrote:
Mon May 18, 2020 4:57 pm
Gold has demolished stocks over the past 20 years. (Yeah, yeah start date sensitivity. Whatever.)

8.69% CAGR for gold vs 5.62% CAGR for the US stock market. Similar standard deviation while gold has had superior drawdown and worst year metrics.

goldvsstocks.png
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Another nod to the most beautiful equation: e + 1 = 0
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Re: Gold Has Outperformed Stocks Over The Past 20 Years

Post by Smith1776 » Mon May 18, 2020 6:42 pm

technovelist wrote:
Mon May 18, 2020 6:36 pm
My plan for world domination is working. Muhahaha!
More and more I think of you as the unassuming guy in the disaster movie who you find out was behind the incident all along. :D
For the money you can't afford to lose, why would you invest it in anything other than the PP? ???
Check out the Goldsmith PP: https://www.gyroscopicinvesting.com/forum/viewtopic.php?f=1&t=9613
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Re: Gold Has Outperformed Stocks Over The Past 20 Years

Post by Smith1776 » Mon May 18, 2020 6:48 pm

I have actually also discovered that the result is remarkably start date insensitive.

Gold still wins a couple years either side of the year 2000.
For the money you can't afford to lose, why would you invest it in anything other than the PP? ???
Check out the Goldsmith PP: https://www.gyroscopicinvesting.com/forum/viewtopic.php?f=1&t=9613
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Hal
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Re: Gold Has Outperformed Stocks Over The Past 20 Years

Post by Hal » Mon May 18, 2020 7:53 pm

Smith1776 wrote:
Mon May 18, 2020 6:42 pm
technovelist wrote:
Mon May 18, 2020 6:36 pm
My plan for world domination is working. Muhahaha!
More and more I think of you as the unassuming guy in the disaster movie who you find out was behind the incident all along. :D
This may be of interest....
https://www.youtube.com/watch?v=mxFokOZYd34

Funny how evil genius's are not interested in cryptos, shares etc but only physical items like gold :)
https://www.youtube.com/watch?v=4u2QR2XuYRk
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Re: Gold Has Outperformed Stocks Over The Past 20 Years

Post by mathjak107 » Tue May 19, 2020 3:04 am

i show stocks beat gold the 5 and 10 year periods so while it is true for 15 and 20 years it is not true for the last 5 and 10 years as of last time i looked.

one thing i cant emphasis enough is that the returns of an asset by themselves mean little .

the size of the investment at the time the action took place is what matters .

it may be all well and good a chart shows gold beat stocks over a 20 year period BUT HOW MUCH you have invested during that 20 year period and at what stages of that 20 year period is the determining factor as to outcome

the last 20 years our investments grew more and more . certainly the results the last 10 years or 5 years carry far more weight then 20 years ago did on our portfolios ..

in fact any portfolio action today on my portfolio when my fuel tanks are full is a big up or down .


so these kinds of results really mean little because it is portfolio size that matters at the period this action took place.. it is usually the most recent action over time that is going to far outweigh action decades ago or even years on our money.

in this case it is all well and good that gold beat stocks the last 20 years , but that is of very little importance to me , what counts way way more is the last 10 , 5 and current years out of those 20 since that is where i have the most money invested compared to 20 years ago ..

size matters and without considering size , the returns on a chart don't mean much to us over extended periods of time where wealth is accumulating .

any action on my large gold position today easily wipes out any action from 10-20 years ago when i had 10-15x less invested in it .
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Re: Gold Has Outperformed Stocks Over The Past 20 Years

Post by Xan » Tue May 19, 2020 9:16 am

Mathjak, I'm not sure I'm understanding the point of your statements.

You're arguing that what matters is how much you had invested at any given time, and how well those investments did. But in fact that is what matterED (past tense), not what matters now. In fact that's what you constantly remind us, that the only thing that matters (present tense) at the start of an investing day is what assets you have, not how long you've had them or whatever.

So what's the point of looking in the past? It seems that it's one of two things (there may be more):
* To assign a "score" to each asset to tell you how much in benefited you to own it. This seems to be your assumption of the reason to look in the past, and I would argue that it's pointless anyway.
* To see how assets have performed in the past in order to attempt to debunk or confirm your theories about how it can perform in the future. For this you need things like the chart that Smith posted.

You're saying the only useful chart would be one that contained how much an individual had invested in each of his assets and how they did. I think that simply reduces to the dollar amount in the brokerage account, no chart necessary (or helpful).
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Re: Gold Has Outperformed Stocks Over The Past 20 Years

Post by mathjak107 » Tue May 19, 2020 9:34 am

my point is as the time frame gets longer and longer the past returns become less meaningful in our calculation and what happens near term matters so much more .

so as an example it was all well and good we can look at returns on asset class the last 20 years but if i had 10k invested early on, the fact those 20- year returns are made up mostly of the better returns 10 and 15 years ago is a moot point when i put hundreds of thousands of dollars in the last 5 and 10 years ,

it is the now , 3, 5 and 10 year return that are going to matter not the fact returns were great 15 , 20 years ago . so even though i owned that asset 20 years ago the fact is the return is different the last 10 years then my numbers would reflect .

this is why averages don't work in retirement calculations and sequence rules your outcome.

averages became almost meaningless when we add money and spend money because it then becomes a weighted average .
Last edited by mathjak107 on Tue May 19, 2020 9:49 am, edited 2 times in total.
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Re: Gold Has Outperformed Stocks Over The Past 20 Years

Post by mathjak107 » Tue May 19, 2020 9:45 am

kitces wrote an article on this very subject .

the years leading in to retirement starting about 10 years out are what he calls the red zone .

the reason is because as your portfolio gets larger and larger , so does the effect of what markets inflict on you ..... great gains early on on little money can be wiped away by poor returns later on when those dollars have grown .

so you need to look at the glide path when going out long periods of time ... that asset in this case may have beaten equities when your resources were little in that asset .... but as you glide into the 10 and 5 year periods it may have lagged badly on a much larger sum of money , which in this case it did lag .... gold picked up again in the 3 year and 1 year .

so results are going to be varied with a diversified portfolio over longer periods of time depending what happened in your case when the amounts invested were highest .

https://www.kitces.com/blog/managing-po ... -red-zone/
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Re: Gold Has Outperformed Stocks Over The Past 20 Years

Post by Kriegsspiel » Tue May 19, 2020 10:09 am

So, kind of a sequence of returns thing then. I'm reminded of the Norstad page which, as far as I know, is correct.
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