Replies to post #42968 on A.I.M. Users Bulletin Board (AIMUSERS)

[ls7550]

Now, here is where the capital side becomes similar to the stock side because if the expected downtrend materializes, the capital side will receive the benefits.
On 6/2/2003, a MACD entry price at 34.42 was entered.
The stock price fell from 51.20 to $34.42 which is a 32.77% loss of which the capital side benefited.
So, this is similar to a stock going from $20.00 to $26.55.

Hi Ocroft.

Most things tend to be measured relative to one asset - cash. It is informative/interesting/revealing however to look at how the purchase power of different asset varies over time.

I haven't the exact figures to hand, however since 1968 when in effect the gold standard ended as part of President Nixon looking at that break as a means to help pay down the cost of the Vietnam war, stocks have averaged around 12% yearly arithmetic average with a 26% standard deviation, which approximates to around a 9.6% compound (annualised) rate (using Pythagorean CAGR approximation). 50/50 stocks and gold - taking the best asset each year, averaged 26% and the worst asset -1.5%, combined averaged also around 12%, but with a 15% standard deviation, which Pythagorean CAGR approximation works out to around 11% annualised. Across that data at times the gold purchase power of stock doubled or more over a calendar year, as did in other years the stock purchase power of gold double or more over a year. Looked at relative to cash however and more often investors tend to be swayed away from gold ... as looked at in isolation it casually seems to have little appeal relative to apparently 'better performing' stocks.

Regards.

Clive.