I am a little concerned about some of the dismissive chatter around inflation. The other day Cody Willard was on the Kudlow show and was dumbfounded when Barry Ritholtz said there are clearly inflationary pressures. Dumbfounded may be unfair but he rejected the notion of inflationary pressures.
I wonder how many folks completely dismiss that the idea that there could be inflation popping up.
This post is not whether there is or is not inflation to worry about. If you look at things like the commodities, the weak dollar and rising rates it makes sense to explore the possibility as they have historical precedent for being inflationary. Whether they are inflationary this time around doesn't have to matter but I think it is unwise to blow this off.
In 1999 people blew off earnings and other metrics of valuation and that had disastrous results. I do not think the consequence for disregarding these inflation warnings will lead to a 2000-like meltdown because I don't think mature equity markets can cut in half twice in a decade but there could be problems of some magnitude.
A lot of media over-emphasizes the positive but the positives are not what will hurt your investment portfolio. I think it is far more productive to try to understand what can hurt your portfolio. I have been bearish all year (and wrong about it of course) but catching the move up. Whistling passed any current or future graveyards is probably a bad idea.
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4 comments:
And I'm always dumbfounded whenever I hear people say there is no inflation.
Have a look at this CRB chart --
http://bigpicture.typepad.com/comments/2006/02/crb_index_5_yea.html
Hard to look at that and think there's no inflation . . .
Everybody knows there is inflation. The gov is printing money. Stamps about to go up AGAIN. Gas costs more. It cost more to live.
Here is the catch...the government will manipulate the data to show NO inflation. This is so they do not have to pay out more social security benefits, which are tied to CPI.
g
If I lived in the world that Cody lives in there would never be a single problem on earth. Cody is the definition of a perma-bull/pollyanna.. For someone to even say we don't have inflation is a pure and out right lie. He is a cheerleader and he is exactly why many talking heads on the thestreet.com and CNBC are not taken serious by anyone with half a brain. Just my two cents.
Roberto
I don't really know Cody's work (have not really read him), but assuming you are correct there are a lot of people that either come across as cheer leaders or in Vince Farrell's case don't really share much.
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