How Saving is the New Investing
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I mentioned in my article yesterday that saving is the new investing. A glance at five year graphs across the board pretty much demonstrate this point. Other than day traders, there’s not much long-term appreciation. And, even for day traders, the increasingly volatile conditions on the markets are making price movements increasingly difficult to predict. Below is the 5-year chart for the S&P 500. At the onset of 2007, at 1450.00, it stood on the edge of a precipitous price drop below 700.00 in 2008-2009. Today, nearly four years later, the S&P 500 hangs 100 points off its high.
The Dow Jones Industrial Average comprises the same storyline. In 2007, at 12,700.00, it stood on the precipice of a fall down to below 7,000.00 in 2008-09. Over the following years, until now, it clawed its way back to about even with its beginning of 2007 price.
In March 2012, NASDAQ reached 5-year highs around 2600 before falling off to 2610, Friday’s close. Up about 800 points from five years ago, NASDAQ stands out with visible gains. But, these gains appear more impressive after the 2009 lows than they actually are:
In an appreciable manner, 10 year notes have preserved wealth, but not much more:
Similar for 30 year bonds:
A truism, commodities have far outpaced the performance of the dominant culture’s investment avenues. And this has meant a built-in tax on anyone’s investment as the cost of living rises. Up 20 points from its 2007 open, crude oil has reached peaks of more than $140.00 per barrel before the 2008-2009 crash. Since, it has reached almost $120.00 per barrel. That a doubling in price since the start of 2007.
Corn, a major staple of the American diet:
Rough rice quietly follows the commodity trend:
And this brings us to the closest thing we have as an investment. I stated yesterday that if the mainstream media calls gold, in particular, an investment, then we must view the metal differently. Personally, for me, it is partially an anti-establishment action – that is, silver and the precious metals complex. I don’t want any of my savings turning into imaginary capital for war. Also, it is a savings account. I use it to accumulate my labor in an appreciative way so that I might enjoy long holidays in the future or be spared of starvation. But, the metals, especially in the last year, have not functioned as an investment.
All markets are too manipulated. Even those shorting the very fragile banking system in the last five years, despite all the turmoil surrounding the market, have not made much. We’ll use the battered JPMorgan as an example:
The stock has moved up since 2005, before the crisis began setting in in 2007. Down is the new up.
Mind the increasing volatility in the gold and silver markets as these “bull markets” have unfolded. The volatility has been an explicit futures market operation to profit short-term from precious metals and to inspire doubt in the markets.
This increasing market volatility in the precious metals will make them resemble nothing like an investment. Although bull markets are prone to major corrections along their price rise, the price corrections that the precious metals markets are experiencing and will continue to experience will not reflect this. Instead, it will be a much more choppy volatility arisen oft out of political and forced price discovery phenomenon. In other words, full spectrum dominance of the price rise.
That is why saving is the new investing – the powers that be will ensure that nobody gets rich – or even comfortable – very easily.