Edward Harrison

It's Time to Sell Equities and Look to These 3 Areas

That's right. This is a bear market rally. I think we are going lower than March eventually.


On Sep 21 11:30 AM Andrew Butter wrote:

> What you actually said on 5th March was:
>
> The long and short is I don’t think we are near bottom. We should
> see more downside before this bear market is over.

It's Time to Sell Equities and Look to These 3 Areas

That is the most controversial of the three calls - especially for those expecting inflation and/or dollar depreciation. However, you should notice that the 30-year is now yielding a real rate of return of 4pct. On a risk-adjusted basis, that is pretty stellar. And given rates are still above 4%, there is still room for capital gains if we do not see a robust recovery or if deflation begins. This is the same calculation that Gross is making.


On Sep 19 06:50 AM TheFounder wrote:

> Agree with gold and the "black swan" option stategy but not with
> bonds. Why purchase bonds at these levels? the only rason I can come
> up with is expecttions for severe deflation and/or a depression.

It's Time to Sell Equities and Look to These 3 Areas

Yes, I meant gold.


On Sep 18 10:14 AM Roger Knights wrote:

> Good article and thanks for the link to the BR article.
>
> BTW, you meant "While GOLD is generally thought to be an inflationary
> hedge,"

It's Time to Sell Equities and Look to These 3 Areas

One other thing. There has been no correlation between inflation and gold over the past twenty-five years.

news.goldseek.com/Mill...

While inflation is generally thought to be an inflationary hedge, it is also a safe haven when there is currency revulsion. During the Depression, gold rose while deflation was everywhere.

It's Time to Sell Equities and Look to These 3 Areas

A tanking dollar does not mean treasuries get crushed. Right now the dollar is falling, treasuries are rising as is gold.

You'd want to be in treasuries even if the dollar fell if you expect the deflationary forces to outweigh inflationary forces from the currency depreciation. You'd want to be in gold if you think the inflationary forces of the depreciation would feed through.

Right now, both trades are being put on i.e. gold is rising and so are treasuries. When it becomes more clear which force is winning the deflation-inflation tension, I would expect a reversal in one or the other.

On Sep 18 06:39 AM bkdc wrote:

> "A scenario in which the Dollar tanks and there is a flight to safety
> in Treasuries is also one in which Gold could outperform at the same
> time."
>
> If the dollar tanks, no one will be buying Treasuries. A tanking
> dollar means a dumping of Treasuries.

How About Gold Backed IOUs for Ireland?

I have to admit this post was a bit tongue-in-cheek. Ireland relied way too much on financial services and an asset bubble for growth. Meanwhile, the public sector became bloated, spending increasing uncontrollably. This is exactly the same situation in California and in the U.K. for that matter.

So, you are right, cuts, although difficult, are necessary. The moral of the story is not to use good times to expand the state because that makes it all the more difficult in bad times.

Would I take the IOU as an investor? Yes, if I could be made pari passu with government bondholders. But, obviously this is not a luxury most creditors of the state have.


On Jul 21 06:07 AM CautiousInvestor wrote:

As with California and Philadelphia, Ireland’s problems stem from a bloated public sector, unchecked spending and excessive taxation.