On 20 August 2011, for example, in an article entitled Candidate of Gloom and Doom, Barron’s stated:[FONT=Times New Roman, Times, serif]Say this for him: Ron Paul puts his money where his mouth is. Over the past 16 years, the dollar gloom-and-doom prophet has invested heavily in gold-mining stocks. It’s his hedge against what the Texas Republican congressman and perennial presidential candidate calls "The Great Inflation," which he has long preached is inevitable, given the profligacy of the federal government and the easy monetary policies of the Federal Reserve.[/FONT]
[FONT=Times New Roman, Times, serif]In all, Ron Paul’s portfolio amounts to a super bearish bet against the U.S. economy. … Paul’s investment strategy is a financial planner’s nightmare. Most pros say that gold-mining stocks should be a small part of a diverse portfolio because the shares tend to outperform in bull markets but underperform in bear markets. Mining stocks, for example, were among the most dismal performers in 2008.[/FONT]
[FONT=Times New Roman, Times, serif]On 21 December 2011, The Wall Street Journal joined the fray. In an article entitled The Ron Paul Portfolio, it reported[/FONT]
[FONT=Times New Roman, Times, serif]Republican presidential candidate Rep. Ron Paul marches to his own drummer in politics – and in his investment portfolio, too. … We’ve looked at hundreds of the annual financial-disclosure forms in which the members of Congress reveal their assets and trades – and we’ve never seen a more unorthodox portfolio than Ron Paul’s. … Rep. Paul’s portfolio is valued between $2.44 million and $5.46 million. (Congressional disclosures are given in ranges, not precise amounts.) … But Ron Paul’s portfolio isn’t merely different. It’s shockingly different.[/FONT]
[FONT=Times New Roman, Times, serif]Figure 2 (next page) shows that real estate comprises approximately one-fifth of Paul’s portfolio, and cash another ca. 15%. He owns no bonds or bond funds, and effectively no managed (what Americans often call "mutual") funds: these constitute a miniscule 0.1% of the portfolio. Moreover, these managed funds are all "short;" that is, the more American stocks fall, the greater are these funds’ returns. Indeed, one is a "double inverse" fund: on a daily basis, it rises twice as much as its stock benchmark falls. It’s important to emphasise that Paul owns no diversified mutual, index or other equity fund: he holds, in other words, no broadly-diversified basket of American or other stocks. Instead, the shares of gold and silver mining companies comprise two-thirds – fully 64% – of his portfolio. Paul owns no shares of world-leading technology firms like Apple; no shares of consumer staples such as Procter & Gamble; no shares of industrial conglomerates like General Electric; and no "too big to fail, too well-connected to gaol" banks such as Bank of America. Paul doesn’t own the stock of any major company at all – except precious-metals stocks like Barrick Gold, Goldcorp and Newmont Mining.[/FONT]
[FONT=Times New Roman, Times, serif]Paul also owns shares of 23 other mining companies – many of them smaller, Canadian "juniors" whose stocks – according to The Wall Street Journal – are "highly risky." In its words, "ten of these stocks have total market valuations of less than $500 million, a common definition of a "microcap" stock. Mr. Paul has between $100,010 and $326,000 (roughly 5% of his assets) invested in these tiny, extremely volatile stocks." It added:[/FONT]
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Rep. Paul appears to be a strict buy-and-hold investor who rarely trades; he has held many of his mining stocks since at least 2002. But, as gold and silver prices have fallen sharply since September, precious-metals equities have also taken a pounding, with many dropping 20% or more. That exposes the risk in making a big bet on one narrow sector.[/FONT]
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Figure 2: Ron Paul’s Investment Portfolio (2011)
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[FONT=Times New Roman, Times, serif]Running an investment portfolio that protects against only one bad outcome is like living in California and buying homeowner’s insurance that protects only against earthquakes, says Mr Bernstein. You also want protection against fire and wind and theft and the full range of risks that houses are prone to. Likewise, he adds, investors should hold a broad mix of assets that will hold up under a variety of good and bad scenarios.[/FONT]
[FONT=Times New Roman, Times, serif]A spokeswoman for Rep. Paul didn’t respond to requests for comment. But you can say this for Ron Paul: In investing, as in politics, he has the courage of his convictions.[/FONT]
There isn’t much doubt that Rep. Paul’s portfolio has outperformed the U.S. stock market as a whole. Ten years ago, the NYSE Arca Gold BUGS Index, a basket of stocks in mining companies, was at $65; this week, it’s at $522. That’s roughly a 23% average annual return; over the past decade, by contrast, the Standard & Poor’s 500-stock index, counting dividends, has returned some 2.9% annually (italics added).[FONT=Times New Roman, Times, serif]On 5 January 2012, in a follow-up article entitled How Weird Is Ron Paul’s Portfolio?, The Journal noted that "Paul’s supporters protested, in their comments [about the article on 21 December], that his portfolio has already been vindicated by its performance." It conceded a vital fact that its first article somehow forgot even to mention:[/FONT]
[FONT=Times New Roman, Times, serif]But it conceded this point very grudgingly:[/FONT]
[FONT=Times New Roman, Times, serif]Yet we would argue that performance alone can’t tell you whether an investment approach is sensible or not. After all, over the 10 years ended Dec. 31, 1999, Internet stocks far outperformed most other investments. [It doesn’t deign to list the Internet stocks that existed in 1989.] That didn’t ensure that they would continue to do so in the years to come, and it certainly didn’t mean that it was prudent to put all or most of your money into stocks like Pets.com or eToys Inc.[/FONT]
[FONT=Times New Roman, Times, serif]The same has been true of countless other assets at many other times and places. In each of those cases, just as those assets were cresting in price, the people who owned them declared that their past performance proved that they were "right" to make huge bets on them. History proved them wrong. In short, investing isn’t just about maximizing your upside if you turn out to be right. It’s also about minimising your downside if you turn out to be wrong. Putting two-thirds of all your assets into one concentrated bet is a great idea if the future plays out just as you imagine it will – but a rotten idea if the future turns out to be full of surprises.[/FONT]
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I bought some metals last week.I am not unhappy about it ,lol
