tag:blogger.com,1999:blog-25740524.post1596975439190045320..comments2024-03-11T13:16:19.098-04:00Comments on Ad Orientem: Recovery or Bear Market Rally?Unknownnoreply@blogger.comBlogger5125tag:blogger.com,1999:blog-25740524.post-66847672793118212052009-07-30T18:15:11.855-04:002009-07-30T18:15:11.855-04:00Ed,
Sorry for the delay in responding to your comm...Ed,<br />Sorry for the delay in responding to your comments. I got distracted and forgot. I think that in the near term the risk of inflation is fairly low. But that risk will rise as time passes. <br /><br />In the intermediate and long term future I concur that we are heading for a nasty round of inflation. We have had a very loose monetary policy for far too long. You can not print money as fast as you can load paper and ink into the machines and run the kinds of deficits we are running for any length of time without long term consequences.<br /><br />I doubt we will see hyper-inflation. But I do expect that we will see a nasty spike in interest rates and the CPI. 1970's style stagflation is a very real possibility. It's also worth noting that the 70's saw their share of bear market rallies as well. I chose to use the 1930's for my main example because the charts were clearer and the catastrophic consequences were much more readily observable.<br /><br />As for where to put your money, that's an interesting question since we are living in a period of severe economic volatility. I have of late become something of a fan of the late libertarian economist Harry Browne and his theory of Permanent Portfolio. I favor a highly diversified portfolio that will weather and even profit from any future eventuality.<br /><br />Harry's basic premise was to keep your portfolio divided equally into four asset classes...<br />25% Equities<br />25% Ultra-Conservative Bonds<br />25% Cash (or near equivalent)<br />25% Precious metals (gold and or silver)<br /><br />With frequent rebalancing the portfolio should produce a nice return over the long term. There is a mutual fund that actually invests using a very similar system called The Permanent Portfolio Fund (PRPFX). It is classed as a conservative allocation fund. PRPFX has been at the top of its class of funds for the last 10 years and although it was down last year (only its 4th down year out of 27) it beat the S&P 500 by about 30 points. Unlike most mutual funds that gave up a decades worth of gains last fall PRPFX is still up with an annualized return of about 7% over the last decade. Not bad all things said.<br /><br />Yours,<br />JohnJohn (Ad Orientem)https://www.blogger.com/profile/14329907942477160166noreply@blogger.comtag:blogger.com,1999:blog-25740524.post-81668373421637841862009-07-27T23:38:14.361-04:002009-07-27T23:38:14.361-04:00John,
I believe you've had Democrat Alan Gra...John, <br /><br />I believe you've had Democrat Alan Grayson on your blog before. <br /><br />I think you would find this of interest:<br /><br />"Alan Grayson grills Ben Bernanke on Foreign Lending 07/21/2009":<br /><br />http://www.youtube.com/watch?v=2_VCy0lMU1g<br /><br />In Christ,<br /><br />SophoclesSophocleshttps://www.blogger.com/profile/07923381271179811989noreply@blogger.comtag:blogger.com,1999:blog-25740524.post-64406184686358192532009-07-27T10:06:41.523-04:002009-07-27T10:06:41.523-04:00Very interesting and informative! Thanks, John.
...Very interesting and informative! Thanks, John.<br /><br />I'm going to post a link to this at Ethics Forum here: http://college-ethics.blogspot.comAlice C. Linsleyhttps://www.blogger.com/profile/13069827354696169270noreply@blogger.comtag:blogger.com,1999:blog-25740524.post-68296645620892786842009-07-27T08:35:57.460-04:002009-07-27T08:35:57.460-04:00For the record, as a guy trained both in theology ...For the record, as a guy trained both in theology and economics, I love your random little economics posts. :-)Edhttps://www.blogger.com/profile/02029716952735323038noreply@blogger.comtag:blogger.com,1999:blog-25740524.post-86455611461546130862009-07-27T08:33:55.116-04:002009-07-27T08:33:55.116-04:00One major difference though, I would think, is tha...One major difference though, I would think, is that the government responded to matters in the early thirties with measures that ended up being deflationary. In the present climate, I would expect stagflation or hyperinflation as the more likely outcomes of what has been going on. In the event of hyperinflation, particularly, holding a high % of one's portfolio in stocks makes a lot of sense. If we're about to see massive currency deflation, then getting out of stocks is your best bet.Edhttps://www.blogger.com/profile/02029716952735323038noreply@blogger.com