So I was recently listening to some additional presentations from an audio series about investment. This particular installment was called “Gold, Hard Money, and Financial Gurus.” I found out that it was actually two presentations: one about “Gold Bugs and Hard Money,” and one about “Financial Writers and Gurus.” Both were as interesting as I expected them to be, and brought back fond memories of my days as a business major.
Gold Bugs and Hard Money
The presentation about “Gold Bugs and Hard Money” talked about the history of investments in gold. It may surprise you to learn this, but the private ownership of gold was banned by the United States government in 1933. Specifically, President Franklin D. Roosevelt signed Executive Order 6102, “forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States.” (see source) Only the Federal Reserve was allowed to hold gold, since the United States was still on the gold standard. The “gold standard” was just a form of price-fixing, which fixed the price of gold in terms of dollars. They go into the gold standard and its history in this audiobook, and talk about the eventual re-legalization of gold in 1974. In doing so, they talk about the value of gold as an investment. Like any other commodity, gold is subject to short-term fluctuations in price. Thus, there has been more than one “gold bubble” in history, including at the moment it was re-legalized in the 1970’s. But as a long-term store of investment, gold is among the best investments out there. Silver is a bit more problematic, because it is subject to greater fluctuations in price than its gold counterpart. But gold is a fairly good long-term investment, and this examination of its history is definitely worthwhile here. This is one of the more economic topics in the series.
A Good Delivery gold bar, the standard for trade in the major international gold markets
Financial Writers and Gurus
The presentation about the “Financial Writers and Gurus” talked about how much one should trust the financial gurus. This is a complicated topic, in part because the influence seems to go both ways. That is to say, the market can influence the financial writers, and (to some degree) financial writers can influence the market. Basically, this presentation is a history of the financial newsletter industry in the United States, through the time that the presentation was made in 1997. One of the interesting things was how much people’s buying decisions can be influenced by the personality of the newsletter writer. People are more likely to take advice from an interesting and well-written newsletter, even when its advice isn’t that great. Newsletters also get more subscribers when they advise people to buy stocks or sell stocks, since people don’t want to pay big money to be told to “stick with cash” – even when that is actually a better investment strategy in a particular situation. Investment newsletters can have their value, particularly when they are taken as entertainment rather than “gospel truth.” But every major advocate of market-timing strategies has gotten at least one major call wrong, particularly if they’ve been in the business for a while. Thus, these newsletters should be taken with a grain of salt. One should examine whether the newsletter’s investment philosophy is in line with one’s own, before deciding whether to take its advice about what to include in your portfolio.
Tom and David Gardner, founders of a financial advising company called “The Motley Fool”
Both of these presentations were quite good, and would give useful information for someone wanting to invest their own money. But I don’t have any plans to engage in investing myself, and mainly just wanted to round off my knowledge of business (and particularly finance). Thus, I found these presentations useful – not to mention interesting.
If you liked this post, you might also like:
Part of an audiobook series
Secrets of the Great Investors
Gold, Hard Money, and Financial Gurus
Others to be covered later
See also the audiobook series
Great Economic Thinkers
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