So much for gold being a safe haven?
Overnight, gold plunged to its lowest level in five years. An ounce of the precious metal will now set you back around $US1,100 an ounce.
Whatever that means.
The amount of time I spend trying to work out the true value of gold is precisely zero.
Gold is virtually impossible to value. It doesn't grow. It doesn't pay a dividend. It's a heavy lump of metal, and about as useful as an ashtray on a motorbike.
An ounce of gold is worth what someone else is willing to pay for it. Full stop.
Back in 2011, some fools (not Motley Fools, it should be noted) were willing to pay $US1,900 for an ounce of gold. Today, just $US1,100 an ounce. Next year? Who's to say gold trades at $US1,200 or $US600 an ounce?
Predicting the price of gold is a mug's game.
Lest you think we're kicking gold when it's down, let me remind you we were kicking it even harder back in 2011, when gold was trading at near those record highs.
"Dump your gold in favour of shares" went our headline in a Motley Fool article published in The Sydney Morning Herald.
Since then…
Pretty good call, I think you'll agree.
Gold is the currency of doomsters, gloomsters and scaremongers. You can read their drivel all over the internet.
Inflation. Deflation. Stock market crash. Blah, blah, blah… sell everything and invest in gold.
Fat lot of good it did anyone buying gold between 2011 and now.
Not only has their gold, and their gold stocks fallen through the floor, but they've totally missed out on one of the biggest stock market bull runs ever.
Still, don't expect the pessimists to give up easily, despite Societe Generale analyst Robin Bhar saying…
"… there is no inflation and there is no catalyst to hold gold when other markets are doing better…"
Speaking of other markets, overnight on Wall Street, the S&P 500 Index hit another new all time high.
Here in Australia, the ASX is on track for a sixth day in a row of gains.
Greece is in the rear view mirror. China's share market has stabilised. US markets have already priced in the coming rise in interest rates.
No wonder Omega Advisors' Steven Einhorn was quoted on Bloomberg as saying…
"There's quite a while to go before this particular bull market ends."
Full steam ahead, Foolish readers.
That's not to say there won't be stumbles along the way. Share markets never go up in straight lines. But they do go up, over time, and consistently trade at record highs, over time.
Nor should you fear buying shares when they trade at record highs. According to Bloomberg…
"Buying stocks when the S&P 500 hit a record has proved profitable as the momentum builds up. The index's 12-month return following an all-time high has been positive 73 percent of the time since 1946…"
Here in Australia, we're still some way off a record high for the S&P/ASX 200 Index.
That's the bad news. The good news is every day, a whole bunch of ASX stocks are making new 52-week highs.
Yesterday was no exception, with about 60 ASX companies making new record highs.
One was Webjet Limited (ASX: WEB), one of my holdings. Since reporting stellar results just two weeks ago, its shares are up a whopping 45%.
Good things come to those who wait. And to those who are willing to buy and hold shares, especially when all around are panicking.
You've got to be in this investing game to win it.
Another ASX stock hitting a 52 week high yesterday was Integrated Research Limited (ASX: IRI).
It's up another few per cent again today, trading at another 52 week high.
Let me tell you a little story about Integrated Research.
Back in the day, when gold was all the rage, little old Motley Fool started a subscription-only share tipping newsletter called Motley Fool Share Advisor.
When we opened for business, a few hundred lucky readers took the plunge, and signed up to receive our share tips.
I say lucky, because our very first share tip was a virtually unknown ASX software company called Integrated Research.
Fast forward to today, and shares in Integrated Research are up almost 400% since that recommendation.
Anyone who followed our advice, and invested say $10,000 into Integrated Research, would be sitting on a profit of $40,000. Not bad for a very modest $199 investment in a subscription to Motley Fool Share Advisor.
There's an old investment saying that the profit is not in the buying, it's in the holding.
It's a little over 3½ years since we first tipped Integrated Research to Motley Fool Share Advisor members.
In that time, the share price has been up, down and all around.
There were times when people might have been tempted to sell to lock in a profit. Times when people might have been tempted to sell because they feared a share market crash.
Not Scott Phillips, our master stock picker at Motley Fool Share Advisor.
He advised subscribers to add to their holdings, or buy afresh, when the dividend yield was just too good to ignore.
He advised subscribers to add to their holdings, or buy afresh, when the valuation was just too good to ignore.
Best of all, he advised subscribers to stick with Integrated Research through thick and thin, to keep holding, keep believing in the company and its management, and keep believing in the power of compounding returns.
You don't get such calm, sensible — wealth creation — advice from your traditional broker.
They typically want to churn you in to BHP Billiton Limited (ASX: BHP) and out of Rio Tinto Limited (ASX: RIO) on a regular basis. The more you trade, the more they get paid.
Not so at Motley Fool Share Advisor.
You pay one modest fee — just $199 for a 12 month subscription. We provide you with share recommendations. You choose whether you buy them, when you buy them, and with how much money.
2011. Buy gold for protection, or shares for growth?
The doomsters bought gold, paying as much as $US1,900 an ounce.
The optimists took the plunge, subscribed to a service called Motley Fool Share Advisor, and bought stocks like Integrated Research.
One is down over 40%. The other is up over 400%. Case closed.
