bearfund

Stagflation and Peak Oil: How Related Are They? (Part II)

A good summary. Unfortunately your very first suggestion is all but useless. TIPS track the CPI, which is not a realistic measure of price increases. They may do somewhat better than ordinary Treasuries, but ultimately the understatement of price rises and the tax disadvantages (see also gold - is it shocking to anyone that inflation protection is taxed so brutally?) will cause them to lose purchasing power.

Then there's the supply problem. The deficit is already enormous and is growing as more bailouts and "stimulus packages" force the Treasury to borrow ever more. For now demand appears to be keeping pace, but there are limits. When (not if, when) foreign central banks decide they've had enough, this game will come to an end and interest rates will rise abruptly. TIPS all have intermediate to long duration (no 1-year TIPS, sadly) and will be crushed when 10-year rates inevitably hit 10% while the CPI continues to be reported at benign levels like 4-5%.

Ron Paul's Investment Portfolio

What's wrong with such a concentrated portfolio? When you're right, you're right. At various times I've hedged my bets, holding junk like C and FNM. It's instructive to look back at my performance over time: every single stretch of underperformance matches a period in which I held something I did not believe in "just in case I'm wrong". I applaud Congressman Paul for saying what he means, meaning what he says, and putting his own personal fortune on the line in a manner entirely consistent with his values. And I don't hedge any longer: my portfolio has a lot less mining than the congressman's, but a lot more physical gold - a holding he almost certainly has as well but (wisely) does not disclose. Why should he hold assets he does not believe are valuable? If you want "diversification" go ahead and buy that crap. But this is not a time for diversification; it is a time to look at the obvious macro trends and take advantage of them. That or sit in cash and cross your fingers that that's still worth something when this is all over.

$200 Oil, $2000 Gold?

kurt walter is dead right. Many Americans have negative net work and many others would, if corporations, be reporting negative annual earnings. There is very little wealth left in America today if one subtracts out all the liabilities. $500 a month is preposterous for most people. They're lucky if their credit card and HELOC balances aren't growing at that rate.