E What Are The Odds?

Taki Tsaklanos' recent article, 5 Investment Tips To Riches, edited and abridged by Lorimer Wilson (munKNEE.com) provides excellent "food for thought" for investors.  I would like to focus on the author's fifth tip: "Only 20% of investors are profitable."

Stock "bugs" (as opposed to Gold bugs) typically and forcefully complain that currency used to buy gold and silver coins and bullion is a poor investment.  They like to quote Warren Buffet.  They maintain that gold and silver are passive--that they aren't actively involved in contributing to the economy(ignoring the obvious participation in the labor force by those involved in discovery, financing, mining, transporting, and marketing),and that they produce no interest income or dividends or splits.

Of course, brokers of equities don't emphasize the hazards of investing in their speculative or high-risk stocks, focusing instead on their awesome potential profits.  They have a whole range of equities for sale, from risky to ultra-conservative, yet, to them, gold and silver are too conservative to even be considered. 

Despite the fact that the market probably couldn't function without hedge funds, brokers disparage the purchase of precious metals as hedges--which is why they are so attractive to some "investors" and not nearly as attractive to "traders."

Before investors start counting profits from equity investing, there are a couple of "debits" that ought to be factored in.

One is inflation.  Percentages of inflation vary because those who compute inflation differ widely in methodologies and in choice of stats, but the most objective computation that I'm aware of puts inflation close to the CPI, at around 2 percent.  So, year after year equity investors need to subtract 2% before announcing profit.

But, inflation isn't the only "debit," because taxes and all the various fees also need to be subtracted before arriving at net profit.

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