Patrick Laughran

Bond Bubble Coming to an End? Prepare for the Bust

The Federal Reserve is not a government agency.

Investment Strategies in These Times of Transition

Nice article that seems to articulate two likely macro-economic scenarios. But where are the suggested investment strategies for these "times of transition"?

Bill Miller on This Tough Market

It's pretty clear by now that most buy and hold investment strategies that are 100% dependent on equities, or the major stock market indexes, have yielded flat or negative real returns since the year 2000. It's pretty clear by now that since that time the U.S. has been in a secular bear market. Going forward, it's pretty clear that at some point interest rates are going to rise (but not this year). Meanwhile, it's pretty clear that the U.S. economy is either in recession or on the verge of one. (I guess if you accept the way way government statistics are calculated for the CPI you can also accept the other government statistics being published). At this point, it's clear that investment in commodities and hedging against inflation, shorting certain sectors and the major indexes, picking high yield dividend stocks, and some trading are the only way to generate real returns from an investment portfolio over the next 8 to 10 years. Bonds will get hammered when interest rates go up. A larger proportion of cash set aside is necessary. Markets and valuations may not hit bottom until 2012. More cash can be invested in equities 4 or more uears from now. Will there be a stock market crash between now and then? There very well could be. Stop loss orders should be employed.

For the next 12 to 18 months credit will continue to tighten. Hundreds more banks will be shut down. The Fed will let inflation eat away at all our net worth through 2008 and well into 2009 - or at least until there's pressure on wages (and people with jobs right now are just grateful to have them). It's going to be hard to make money, let alone preserve captial, for a long time. But the world as we know it will not end. We're just all going to have to pay a price over the next few years for the war(s), allowing the dollar to weaken so much, and our increasing lack of ability to generate jobs that pay well in the private sector here at home. This is the reality and I don't see how it can be avoided. We're in a secular bear market for years to come. Pure value style investing (mutual funds) are a very small proportion of my portfolio and will remain so for a long time.

The White Elephant That Could Destroy Your Portfolio, Part I

The citizens of the United States and the media are as much to e as the politicians. How do we expect our personal and collective debt to be paid? How do we expect the wars we are fighting on 2 fronts to be financed? There's only one way out at this point - monetary inflation. It's really that simple. Be prepared.