CAUTION: Investment Extremists Can Get Wiped Out

In 1985, America was just coming off one of the worst bouts of inflation in its history. Much as today, with inflation trailing off but still a worry in everyone’s mind, an argument naturally broke out between extremists in the financial media over whether America was poised for reignited hyperinflation or a deflationary death spiral. I had recently pioneered the Financial Armadillo Strategy and was asked to add my voice to the discussion with an op-ed in the June/July 1985 issue of Reason magazine. Instead of piling on with more extremism, I wrote: In the last decade, the world economy has become increasingly complex and unpredictable. Today, depending on the evidence being considered at … [Read More...]

Dip a Toe into Gold

In June of 1993, Bloomberg’s Pam Black asked me how to stay ahead of the inflation curve. I told her to “dip a toe” in gold. I continued: “Buy it with the idea that you won’t make any money. Hopefully, your other assets will do well, but if they don’t, you’ll be damn happy you were in gold.” Take a look at the chart below, and you’ll see how gold and the dollar have performed since that article was published. … [Read More...]

“Inflation Dodger”

You want a history lesson? In 1987, I was interviewed by The Kiplinger Magazine - Changing Times (which is known today as Kiplinger’s Personal Finance). This wasn’t long after I had written Financial Armadillo Strategy with the late David Franke. At the time, America was coming off some of its heaviest inflation ever, and investors wanted a solution to the problem. Despite those high rates of inflation in the 80s, I warned that even somewhat more moderate rates of inflation—like those Americans have seen over the last two years—do real harm to investors. “I don’t mean 10% or 15% inflation; 4% or 5% is absolutely debilitating,” I said. Even then—like today—I was focused on dividends and … [Read More...]

Big Bets: Wellesley Fund vs. Jekyll and Hyde

We live in a world of big bets. You can’t watch a sporting event without being bombarded with advertisements for ways to bet on it. You can’t read about investing without ads on this “winning” strategy or that one. And this isn’t about the “kids” because Baby Boomers are buying bonds in one account while trading options in another. They’re what I call the Jekyll and Hyde investors. And they’re everywhere. I get it. It’s hard to be “safe” with your money. Yes, you know how hard it was to make it, but “look at the opportunities out there,” you say to yourself. You subscribe to this system or that, and before you know it, you’re trading with the stars. That is until a once in a generation … [Read More...]

Biden’s Debt-Fueled Spending Binge and America’s Credit Rating

Since the “temporary” stimulus package of 2009 was enacted by Barack Obama and greased through the system by Ben Bernanke’s Federal Reserve, Americans have faced ever more burdensome budget deficits. After Joe Biden moved into the White House, the dangerous spending reached a new level. Uncontrolled money printing has set America up for some hard lessons as the interest on the federal debt rapidly closes in on $1 trillion a year. This time around, the Federal Reserve isn’t running a bond-buying program while pegging interest rates at zero. Instead, the Obama/Biden-style spending will be forced to face the music on interest. Now, after years of profligate spending, Joe Biden has put … [Read More...]

Fidelity and the Flight to the Suburbs

Originally posted on May 13, 2021. Back in February, I wrote to you about how I started in the institutional research and trading investment business at Model Roland & Co. on Federal St. in Boston in August 1971. Just up the street from Model were Fidelity Investments, and Wellington Management, both of whom I called on from my very first hours on the job. Over five decades ago, Ned Johnson, aka “Mister Johnson,” ran the show at Fidelity. At Wellington, Jack Bogle, “Mr. Mutual Fund,” had not yet left Wellington to start Vanguard.    My focus in the initial going was international research and trading, and remains so today all these decades later.  I still consider Fidelity and … [Read More...]

The Single Worst Market Timing Event in History

Attempting to time the market could be the most popular mistake among market participants. Here’s what I wrote about market timing back in January 1997: Panic!... History has been made. Since the exact summer Dow low of 5346.55, the Dow has soared an amazing 21.9%. Never in stock market history has the Dow added 1,000 points so fast. As a cap to the monster four-month surge, the Dow Jones News Service headlined a lead story with, “November Point Gain Was Largest Ever for the Dow.” To anyone who was foolish enough to sell stocks in front of this tidal wave, the bailout goes down, in terms of points, as the single worst market-timing event in history. How have you fared? With a … [Read More...]

CAT 5: Prepare for Hurricane Lee

Hurricane Lee has strengthened to a Category 5 storm and is barreling through the Atlantic on course to hit America's East Coast. Right behind Lee is Tropical Storm Margot, which is also expected to reach hurricane levels. First Coast News reports: It's very active across the Atlantic basin, but thankfully there are no local threats in Jacksonville within the next week. Remember to stay updated this time of year as the historical peak of the Atlantic hurricane season is approaching. Tropical Depression 13 has formed in the Atlantic, and it is forecast to become a major hurricane by Saturday. We are watching it closely as models suggest it could head towards the Caribbean, or travel just … [Read More...]

Javier Milei: A Light in Argentina’s Darkness?

Argentina has suffered rampant inflation, bad government, and declining freedom for years. Now, according to Daniel Raisbeck at the Cato Institute, Argentinians have the opportunity to elect someone with a real plan to give them back control. Raisbeck writes: “We are all Peronists,” remarked Argentina’s corporatist strongman Juan Domingo Perón in 1972, the year before he assumed the presidency for the second time. His quip turned out to be more accurate for the 21st century than for his own times; in 1976, Perón’s second wife, Isabel, was ousted from power by a military junta that ruled until 1983, when the Peronist Justicialist Party lost the presidential election in an upset. Since … [Read More...]