E.D.Hart

Three Solid Investment Themes

Regarding our current maelstrom, I hear a lot of comparisons to the 30s, and also to Wiemar Germany, as well as to Japan in the 90's.

Less often stated until very recently is the comparison of our malady to the US in the 70's and its stagflation--lower growth, and higher inflation. Is it just me, or does it seem more likely than not that we will have some level of lower growth and higher inflation going forward, although we know not the extent to which.

Therefore, it might be prudent to position ones portfolio toward those plays that worked in the 70's---energy, gold, and oil service stocks.

I agree with Dr. Leeb and his three themes--inflation protection (gold/silver), energy, and international diversification. This seems to be just common sense. But not necessarily commonly believed.

Richard Russell: Bear Market Remains in Force

Jimbo,
Thanks for responding--as a proud teacher, libertarian, and history/literature buff, I can tell you with absolute confidence gained from experience that sarcasm is a very offensive weapon (both senses of the word intended) .

Mark Twain, Shakespeare, et. al. Sarcasm is great stuff. I fully expect to get way more negative hits than positive, but so what? It actually puts the other person on the defensive---and every so often stimulated more thinking than a straight argument.

So, there you go, I couldn't disagree more. I abhor hypocrisy, and sarcasm seems one way to get people to think about it where they wouldn't otherwise.

Richard Russell: Bear Market Remains in Force

It is best to keep most political discussion out of economic discussion...but because the current crisis is partly the result of politicians...lets go hunting for people to blame. (also because of some previous posts)

1) Obama the Socialist---this is a good one. Wasnt it the bailout of Wallstreet banks (socialsm) proposed by the other guy that was in that big house for 8 years?

2) Taxes = bad = confiscation= socialism. This is some good critical thinking. So when we fight two wars, one of them unnessary, triple the nations balance sheet debt, and cut taxes, this is smart money management right? Taxes are bad, but debt that drives up taxes in the future is good? Taxes are bad, but massive war spending, medicare spending, and wall street bailout spending is good?

I dont know, but it almost seems like taxes and spending are, like somehow, ahhh, related.....

3) The best course of action would be no taxes--then we could default on our debts, and go back to bartering, hunter gathering, and anarchy---the only real freedom. Ill be happy then because their wont be evil taxes and evil government.

4) Clearly the answers are keep lowering taxes, until you run out of ideas (oops, aready there) keep talking about the F word ()"Freedom" as a patriotic slogan rather than a real idea--so its citizens cant see the wizard behind the curtain reducing our real freedoms--such as the GREAT PAtriotic act, FISA reform, and the necessary and oh so useful wiretapping against our citizens. Clearly there should only be one political party--the Republicans who are the nations vanguards of freedom and democracy.

5) Please do no critical thinking when reading or listening to political ideas, just go with whatever is consistent with the winning ideology and the current zeitgeist. Then we can get back to blaming and self righteousness, instead of all this problem solving that is currently going on, messy though it may be.

Consumers Buy Into Disinflation

On the contrary--wages can fall, or stagnate, and inflation can accelerate. All it takes is an increase in the money supply through credit and fractiional banking.

See the 1970's.

Also, it is possible to have rising wages and falling prices, or relatively low inflation. With rising productivity faster than the money supply increasing.

Wage growth can be greater than or lesser than the rate of the increase in prices.

What the Hedge Funds' Bad September Could Mean for Markets

Reasearch Published by Morningstar demonstrates that "on the whole, hedge funds do statistically even with the universe of long only mutual funds" before fees, after fees of course, on average, they are losers, relative to long only mutual funds.

I sense a reality check <wink back at ya>

Post-Bailout Investing: The Big Picture

Thanks Chris, great stuff.

Risk Management in Trending Markets

I wish all SA writers were as lucid and straightforward. Excellent article.

The Dead Cat Returns to Earth

Regarding Socialism: America is the only country where socialism is for the rich, not the poor.

A Fed Rate Hike Won't Solve the Current Crisis

I have to agree that inflation is what destroys wealth. Few benefit, most suffer, especially the poor and the struggling middle class. The wealthy are usually adept at avoiding the worst inflation better than the rest.

There are benefits to everything, including cancer and war. But that doesn't make them desirable or something we would hope for.

The Ongoing Challenge of Inflation Momentum

This commnet is curious to me: "Nonetheless, if you've owned commodities for some time, it's a good time to start thinking about rebalancing from winners to losers on an asset class level. No, we're not sure that bottoms in stocks, junk and REITs are imminent, but if you have a long-term horizon you could do a lot worse by starting tobuy, albeit cautiously and with an eye on time diversifying purchases over the coming months and perhaps even years."

It seems to me that if inflation is accelerating, which is the main premise of this article, that you could do a lot worse than letting your winners run in commodities, and cutting your losses in financials and bonds.

It seems to me that we can only see interest rates go up from here, after the election. Who wants to cut exposure to the only asset class that is outperforming in a rising inflationary environment?

Rebalancing asset class exposure should not be done blindly, or as automatic process of so called "risk reduction", but only in response to ecess valuation, and changing economic fundamentals.