Wednesday, October 29, 2008

Stock vs Gold vs Property

Below I share some historical trends for Stock Market, Gold and Property.  They are not directly correlated but each is good enough to represend some form of global historical trend.  So they are good enough as an overview and for layman entry level comparison.
Stock market
Comparison 1 - 1975 to now

Gold has earned 3.5x
Stock market 8x
Property 10.7x

Comparison 2 - origin to now
Gold 28x ( since 1930 )
Stock 800x  ( since 1944 )
Property  16x ( since 1960 )

normalize above return by the difference in years become
Gold  35.9% 
Stock  1250%
Property   33.33% 

However, stock starts at 1 in 1929 and therefore give too large a gap in above comparison.  So I decide to use 1960 where stock index is at 20.  If I use this 20(1960) instead of 1 (1944 ) for stock, then I get

Gold  35.9% 
Stock  83.33%
Property   33.33% 

Gold Trend in Longer History

Comparison 3 - lowest valley to highest peak

Gold's peak at 1000 at 2007
Property peak at 181 at 1996
Stock dip to 1 in 1984

Gold  40x ( min 1923 max 2007 )
Stock  800x  ( min 1984 max 2008 )
Property  22.6x ( min 1960 max 1996 )

Gold  47.62% 
Stock  2352.94%
Property    62.85% 

Like wise stock's number is too crazy so I use 20 instead of 1 for stock and result this:

Gold  47.62% 
Stock  117.65%
Property    62.85% 

I am not too excited about any of these return rate because past performance does not guarantee future profits.  However, after looking at these graph I am very excited because I think I see some repeated trends in stock market.  It seems QUITE predictable from this graph alone.  However, I cannot figure out any "Patterns" for Gold and Property.  Therefore I am quite sure what I need to do for stock investment, but not the others.


so my final word on this comparison is you should only read this for 'fun' or at most a guide only.  Remember that global trend and all these 'overall' figure does NOT really affect you.  Because you will NEVER buy the whole world.  You will only buy a few stocks or just 1 or 2 properties.  The unique buys you make for yourself determine the REAL profit for your very self.  Global trend does NOT mean you have no chance to out beat it.