The Case For Inflation

[Rickson9]

For those who may be interested.

"Warren Buffet`s Berkshire Hathaway has shifted its portfolio towards bonds with shorter maturities. The sage investor eschews gold as an asset, but is tightening up the Berkshire portfolio as inflation concerns weigh on his mind.

"The representation of bonds in Berkshire`s portfolio with a year or less until maturity has increased from 16% in early 2009, to 18% as of March 30 this year, and to 21% as of June 30. This shift means that the average maturity of the entire bond portfolio has been getting shorter."

...

"The portfolio moves by Berkshire come as Buffett has repeated his forecast for higher inflation thanks to deficit spending by the U.S. government; if higher interest rates are in the cards, he`s made the right play."

http://finance.yahoo.com/news/Buffetts-Les...052440.html?x=0

 

[Conrad5]

QUOTE (Rickson9 @ Aug 14 2010, 12:09 AM) For those who may be interested.

"Warren Buffet`s Berkshire Hathaway has shifted its portfolio towards bonds with shorter maturities. The sage investor eschews gold as an asset, but is tightening up the Berkshire portfolio as inflation concerns weigh on his mind.

"The representation of bonds in Berkshire`s portfolio with a year or less until maturity has increased from 16% in early 2009, to 18% as of March 30 this year, and to 21% as of June 30. This shift means that the average maturity of the entire bond portfolio has been getting shorter."

...

"The portfolio moves by Berkshire come as Buffett has repeated his forecast for higher inflation thanks to deficit spending by the U.S. government; if higher interest rates are in the cards, he`s made the right play."

http://finance.yahoo.com/news/Buffetts-Les...052440.html?x=0

Does Warren Buffet get it right all the time?

 

[Rickson9]

QUOTE (caglah @ Aug 14 2010, 02:48 AM) Does Warren Buffet get it right all the time?

A better question is, "Is it important to get it right all the time?".

 

[gwasser]

QUOTE (caglah @ Aug 14 2010, 12:48 AM) Does Warren Buffet get it right all the time?

No, there is even a book titled: "Warren Buffett is not perfect".
But... he is right most of the time

Is Don Campbell right all the time? I propose a book titled: "Don Campbell is not perfect".
But... he is right most of the time

Don is also expecting higher interest rates and thus a better economy and thus more inflation.

Is Godfried Wasser right all the time? I propose a book titled: "Godfried wasser is far from perfect, but... "

Godfried expects moderate inflation and a low interest rate regime for at least another year. But then Calgary`s summer is coolest in a long time, while Canada`s is hottest. Godfried is clearly a contrarian. Also, Godfried often changes his opinion.

 

[housingrental]

Lets all hope he`s right
Potential for lots of pain to be coming if he isnt

 

[toponemike]

QUOTE (caglah @ Aug 14 2010, 12:48 AM) Does Warren Buffet get it right all the time?


with a net worth of 47 billion, odds are his is right

 

[Thomas Beyer]

a Case for DEFLATION .. certainly in the short-term (2-4 years):

http://www.planbeconomics.com

 

[Rickson9]

QUOTE (ThomasBeyer @ Aug 15 2010, 12:59 PM) a Case for DEFLATION .. certainly in the short-term (2-4 years):

http://www.planbeconomics.com

Thanks Thomas! Very interesting reads!

How many of the contributors have their money on the line (e.g. Berkshire increasing their exposure to short-maturity bonds)? I know PIMCO`s Bill Gross has made his deflation bet. Anybody else?

Since I hold stocks and RE it would appear that I`m leaning towards inflation moreso than deflation...

 

[gwasser]

QUOTE (Rickson9 @ Aug 15 2010, 11:00 PM) Thanks Thomas! Very interesting reads!

How many of the contributors have their money on the line (e.g. Berkshire increasing their exposure to short-maturity bonds)? I know PIMCO`s Bill Gross has made his deflation bet. Anybody else?

Since I hold stocks and RE it would appear that I`m leaning towards inflation moreso than deflation...

I own a very small part of Berkshire... very very small. If the company had doorknobs, I probably own a sliver of a doorknob. But I am an owner. I have also short term bonds. At the same time, I own real estate and dividend buying stocks. Recently I sold stocks that were dissappointing or that I was no longer comfortable with to raise cash. I also bought downside protection in the form of call options sold at the current stock price. I have been higher in cash than I was for a long time (even higher than during the 2008 crash).

That way I have adjusted my portfolio for deflation and a traumatic SeptemberéOctober. But, it is only one scenario and we could get inflation or something in between. The latter is my guess so I still own a lot of income producing stocks and cashflowing real estate. I am still working on bullet proofing my investments but I won`t go all the way. I think the coming two months are critical.

Having said all that black doomsday stuff. I also know that a lot of investors are rather pessimistic right now. Bond markets are booming because of the yield chasers who have apparently forgotten that 2008 was largely a credit crisis with too much available credit being the cause.

When a large portion of investors think a certain way, the scenario is often already build into the market valuations and thus it is unlikely to happen. In terms of world famous investor Ken Fisher, when we we anticipate something to happen `en masse` it is likely that something else will happen but that does not mean the opposite will happen (i.e. being a contrarian is likely not right either).

An investor`s life is tough

 

[bizaro86]

QUOTE (gwasser @ Aug 19 2010, 09:23 AM) In terms of world famous investor Ken Fisher, when we we anticipate something to happen `en masse` it is likely that something else will happen but that does not mean the opposite will happen (i.e. being a contrarian is likely not right either).

An investor`s life is tough

Godfried, have you read Ken Fisher`s book, "The Only Three Questions that Count?"


For anyone interested, even a little bit, in the stock market it`s an excellent book. I`ve read hundreds of stock market advice type books, most of which are basically the same. This is one that brings a truly different perspective to the field. I suspect his approach could be used in Real Estate investing as well, as the focus is on using information in different ways that other people, which is critical thinking valuable in any field.

Michael

 

[gwasser]

QUOTE (bizaro86 @ Aug 23 2010, 09:30 AM) Godfried, have you read Ken Fisher`s book, "The Only Three Questions that Count?"


For anyone interested, even a little bit, in the stock market it`s an excellent book. I`ve read hundreds of stock market advice type books, most of which are basically the same. This is one that brings a truly different perspective to the field. I suspect his approach could be used in Real Estate investing as well, as the focus is on using information in different ways that other people, which is critical thinking valuable in any field.

Michael

Yes, that are where some of my more contrarian (or better different views come from). This was one of the main messages that I walked away with while trying to digest this overall tedious book. Good ideas but very tough slugging (in my opinion).

 

[bizaro86]

QUOTE (gwasser @ Aug 23 2010, 09:06 PM) Good ideas but very tough slugging (in my opinion).

I agree about the tough slugging. I had to read it twice, but found it worthwhile to do so.

Michael