MAR
26
2011

Why People Don’t Buy Gold, and Why it’s Stupid to Think for Yourself


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Why people don’t buy gold, and why it would have been smart to buy a house at the top of the market, so long as everyone else was doing it, and famous well-known economists like Alan Greenspan, Ben Bernanke, and others said real-estate would never go down.   Learn why it’s stupid to think for yourself.  Very funny video, and with our current state of affairs, sadly quite true…

On the other hand, it also helps explain why there is so much opportunity in the markets, as people make the same mistakes over and over again, as they try to avoid “feeling stupid”, or being called “strange and weird”.

Note: Posting this video wasn’t meant to suggest that NOW is the best time to buy gold (alas, it is already up over 6 fold over 10 years), and in fact in the past I’ve suggested that silver would likely be an even better investment longer term (as does seem to be the case so far). However, perhaps for the real point… don’t be one of the lemmings running out to buy it when everyone’s finally talking about what a great investment it is and how it too can’t ever go down. There is a time and cycle for everything. In the meantime, study, research, make up your own mind, and possibly consider picking some up when it’s unfavorable or unfashionable to do so. (You can also check out some of the related links I posted below).

As Benjamin Graham once said, “You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.”


Man: What are you trying to sell me?

Woman: I have 100 oz of gold.

Man: But why should I buy gold?

Woman: Because it is the only money that no central bank can print

Man: But I can buy blue chip stocks instead.

Woman: But they have been going down for 10 years while gold has risen 6 times.

Man: So I will buy high-tech stocks.

Woman: But they have also been going down for 10 years.

Man: So I will buy government bonds.

Woman: But they only yield 4.3% for a 30 year maturity.

Man:  They never go down.  I will buy them.

Woman: But the United States and all the governments in the world are bankrupt.

Man: Government bonds never go down.

Woman: They did in the 70′s.

Man: That was a long time ago.  Government bonds never go down.

Woman:  People said that about real-estate.

Man: I know. I said that too when I bought 3 houses for 2 million dollars with no money down.

Woman: And what happened?

Man: I lost everything and my wife took my car and kids.

Woman: When did you buy the real-estate?

Man: In 2005.

Woman: Do you know if you had bought gold back then you would have made 3 times your money?

Man: But nobody knew real-estate would go down and buying gold is just gambling.

Woman: But I told you real-estate would go down.  I warned you at least 100 times.

Man: Yes, but you’re not a well-known economist.  I only listen to well-known economists like Alan Greenspan, Larry Summers, Ben Bernanke, Paul Krugman, and Ben Stein.

Woman: And what did they say?

Man: That real-estate would never go down.

Woman: But they were wrong.  Why are you still listening to them?

Man: Because they are well-known economists.

Woman: Why aren’t you listening to investors like Hugh Henry, Jim Rogers, Marc Faber, Mish, Peter Schiff, and others that saw the crisis coming?

Man: Because they are not well-known economists, and they never won a noble prize.

Woman: But who cares what they won if they’re always wrong?

Man: I am a serious investor.  I can’t put my faith with unknown people.  I need to take the advice of serious economists.

Woman: What makes them serious?

Man: They studied at good schools and they won prizes.

Woman: But what good is that if they’re always wrong?

Man: They are not always wrong.  They are only wrong when they don’t predict things that nobody else predicted.

Woman: But if everyone listens to a few people that all think the same, then how can we make any progress in preventing economic crises?

Man: I don’t want progress, and most people don’t want it either.

Woman: So what do you want?

Man: I do not want to feel stupid.  I do not want to be called strange and weird.

Woman: And how do you prevent that?

Man: I listen to a few people that everybody else listens to.  Then, if I am wrong I don’t feel stupid because everybody else made the same mistake.

Woman: Wow.  Are most people like you?

Man: Yes, except for a few people that think for themselves.

Woman: But those are the people that help the world make progress.  Those are the ones that make a lot of money,  or invent things that the rest of us can enjoy.

Man: But they risk being called stupid or strange.  I don’t have that risk.

Woman: So you don’t care that they will be much more wealthy than you?

Man: For that I have socialism.

Woman: What?

Man: In socialism, the government can take their money and give it to me.

Woman: What?

Man: Let me use an example.  Let’s say you are right and gold goes up to $10,000/oz, I can always vote for someone who will take your gold and give it to me.  But if you are wrong, you will lose everything.  See?  I was wrong about real-estate, but because everybody was wrong with me, I now live in a six bedroom apartment and I don’t pay a mortgage or rent.  You see, you are paying taxes so I can live for free.  And it was all because you were stupid enough to try and think for yourself.

Woman: Can’t beat that…
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