GOLD PRICES - Justified or bubble?

[World Colonial]

Correct. And here are some other facts to consider. Today, the dividend yield on the DJIA is a paltry 2.33%. Prior to the stock mania, the lowest yield on this index was 2.89% on -you guessed it - September 3, 1929 and about 3% on August 25, 1987, right before two historic stock market crashes.

 

I do not think we are headed for a headline crash right now (I might change my mind later) but this is an indication of the lack of "value" in stocks today and for quite a long time. Almost everyone looks at earnings but anyone who is familiar with accrual accounting will know that EVERY single item on the balance sheet and many or most on the income statement could differ if the application of accounting standards changed or the standards changed. We saw this with companies like Enron and I will not be surprised if we see it again.

 

Other valuation measures other than the P/E are also much higher than historical norms prior to 1995. These include market capitalization to GDP and price/book and price to sales ratios. Investors do not care about these valuation measures but logically, they should not care about earnings either. Earnings either show up in book value or are paid out as dividends. Its one or the other and you cannot take them to the grocery store and spend them.

[BULLY]

I was going to mention also what world colonial alluded to.....numbers 3,4,5,6, & 7 of the "safe" stocks are far from companies that produce "needs"...if we get into serious financial problems for large groups of Americans...items like Pepsis and chips get replaced with tap water, iced tea and concentrated juice mix.

 

 

Ironically though, many Americans are "brand loyal" when it comes to very specific taste. And, when shopped correctly, can buy their preferred brand at LESS THAN the store brands, and stock up until the next sale. Or buy it at WalMart or Target, vs. the higher priced grocery store, etc. When you can get 2liter Pepsi or Coca products for 88c per bottle, vs $1.09 for no-name brands, it behooves consumers to opt for their first choice.

 

And don't forget, that some of these companies also make Iced Tea AND juice concentrates!

 

 

Name brand products will take huge hits with tight budgeted consumers...I mean, Safeway brand toothpaste for $2 or Colgate/Crest for $4.50?...that $2.50 could be spent on 'Select Shampoo"....

 

Similarly to the brand loyalty remark about soft drinks, I cannot imagine EVER paying $4.50 for Colgate or Crest toothpaste, and I'm a stockholder in each parent company who loves supporting my brands!

 

I watch for the sales at Target for example, they take coupons, Costco doesn't (except when they offer their OWN coupon books), and I will take $1 or even $2 off a Colgate of Crest brand toothpaste (the fancier ones even), knocking down even the Colgate Total or the Crest Pro-Health to literally 99cents or $1 per TUBE. Honestly, I rarely pay more than $1 for a tube of name brand toothpaste -- the most I'm willing to pay is $1.50, and then for something like the Crest Vivid White or Vivid White Night. Cheaper than the store brands, which rarely go on sale, and if they do, for maybe 10 to 15 cents less than their regular price, making the name brands with coupons a better deal.

 

Softsoap (Colgate Palmolive) shower gel can also be a SUPER bargain compared to generics or off-brands. Grocery stores $3.99-$4.99 and up per bottle. Target? BONUS 2-packs that are Buy 1/Get 1 free (that is, the two pack is really only the cost of one), and the one costs $3.33, and it's a larger size than at the grocery store for $3.99. AND you can use a coupon to lower the cost even more. They also offer a deal where if you buy THREE of the two packs, they give you a $5 Target gift card -- so you spend $9.99 (less any coupons, up to $3 more off, so $6.99 total spent), you get SIX large size bottles of name brand shower gel, and then you get a $5 Target Gift Card to boot -- net cost if you subtract the gift card effect, $1.99! And generics are superior to name brands because...?