Calamity Insurance
What percentage of your investments should be in precious metals? Of that percentage, should you count gold-mining stocks? Those are questions I struggle with. I don't really have any good benchmarks, but I've heard "no more than 10%" offered by mainstream investment advisers, with grudging acquiescence to 20% if the portfolio includes mining companies.
If you want metal as insurance only, one esteemed adviser says you should hold more than 5% but no more than 12%. I found that in this month's issue of Forbes. Link. The adviser is Jean-Marie Eveillard. He's been mildly bullish on gold for years, and despite its spectacular success during the last decade, he continues to be bullish on gold. And for the same reasons I am: no one really seems to know what's going on. "Eveillard believes the current level of economic uncertainty is so great, and so much depends on the Fed getting things right, that gold is one store of value that no value investor should ignore."
The short article is packed with other gold insights, positive and negative, like this one:
Before 1971, when President Nixon eliminated the international convertibility of dollars into gold, it wasn't so important for a U.S. dollar investor to hedge against his home currency. Now, says Eveillard, you need the metal as "insurance against an extreme outcome," given that the system of fiat money is "fraying at the edges."
BTW: If you're like me, you hold nearly ten different kinds of insurance: house insurance, general liability insurance, umbrella liability insurance, malpractice insurance, car collision insurance, car liability insurance, health insurance, disability insurance, life insurance. All insurance does one thing: Protects you from a major financial disaster. There is no insurance for the type of financial disaster that might be coming at us in the next one, five, or ten years . . . except precious metals. I'm puzzled by people that can afford such insurance but decline to purchase even a small "policy." It might be a horrible investment, and it might (probably will) turn out to be unnecessary (just as my term life insurance premiums have, thankfully, failed to render any sort of return). But to hold no financial calamity insurance at all? I'm not sure I see prudence in that decision.
How Much is "Friendship" Worth?
Sports sponsorship fees have been outrageous for years. I've never begrudged them, but I always thought they were ridiculous and represented more of a "friendship fee" ("If we pay Jordan $3M, he'll come to our events and be our friend") more than smart marketing. Apparently, the market is beginning to agree:
Marketers are growing wary of, if not downright antagonistic toward, sports endorsements and sponsorships.
Drug cheating, thuggery and sleaze have taken their toll. But marketers are also wondering whether they are getting their money's worth from their dollars. That logo that you paid $1 million for on race-car driver Ricky Rudd's front bumper? You can hire a firm to tell you how many people saw it in person or on television and what kind of people they were. Then you can compare that sponsorship, in cost per thousand viewers, with an online banner or a Google search ad. The sponsorship may not look so smart.
Hey, maybe blog advertising will pick up!
But His Tithing Won't be Worth as Much!
Brit Hume had some advice for Tiger Woods during this week's "Fox News Sunday." Woods will recover as a golfer, Hume says, but it remains to be seen whether he will recover as a person. "He's said to be a Buddhist," Hume said. "I don't think that faith offers the kind of forgiveness and redemption that is offered by the Christian faith. ... Tiger, turn to the Christian faith and you can make a total recovery."
Link.
Mainstream Paul?
The LA Times has declared that Ron Paul is no longer on the fringe! Far out. Maybe I can come in from the cold, too.
With the economy still struggling and political divisions deepening, Paul's ideas not only are gaining a wider audience but also are helping to shape a potentially historic battle over economic policy -- a struggle that will affect everything including jobs, growth and the nation's place in the global economy.
Already, Paul's long-derided proposal to give Congress supervisory power over the traditionally independent Federal Reserve appears to be on its way to becoming law.
