Ten Economic and Investment Themes for 2011

[Plumbline]

Ten Economic and Investment Themes for 2011

Does anyone ever read Mish?  I don't agree w/ everything he advocates, but his calls on the Dollar have been fairly true. A good place to start would be here: 

http://globaleconomicanalysis.blogspot. ... s-for.html

or audio

http://commoditywatch.podbean.com/2011/ ... -shedlock/


He is calling for the Dollar to strengthen n 2011, among other things.

[MediumTex]

I like Mish, but the problem is that he is basically a well-informed amateur.

His theories are sound, but not especially subtle or nuanced.

As pundits go, he's great.  As financial philosophers go (which is how I would describe HB), he's just a bright rookie.

I view Chris Martenson in the same way.  He is sort of the Mish of the inflation camp--a well intentioned and smart guy who has no background in finance, economics or philosophy, but who tells a great story.

The basic problem with most of these guys is that they can tell you what SHOULD happen, but what SHOULD happen and what DOES happen are two entirely different things.

[Plumbline]

MT - I appreciate your feedback.  Enjoy reading your posts and reposnses.  Eventhough I am not fully invested w/ PP I can see that there is not the sense of urgency to keep abreast of each macro or micro market move, but I do like to read and learn. Who do you read regularly?  I usually catch Hussman on Monday, Mish several days a week and a few others sprinkled in.  There is a tendency to second guess yourself from one day to the next depending on the topic dejour.

[craigr]

MT - I appreciate your feedback.  Enjoy reading your posts and reposnses.  Eventhough I am not fully invested w/ PP I can see that there is not the sense of urgency to keep abreast of each macro or micro market move, but I do like to read and learn. Who do you read regularly?   I usually catch Hussman on Monday, Mish several days a week and a few others sprinkled in.  There is a tendency to second guess yourself from one day to the next depending on the topic dejour.

The more you use the permanent portfolio the less you read any of these news sources. The information is entertaining, but just isn't actionable. I would only use it for variable portfolio bets, if that.

[MediumTex]

Who do you read regularly?

I read a lot of different sources, but Contary Investor does a free market commentary that comes out on the first of every month that I never miss.  It's always informative.

http://contraryinvestor.com/mo.htm

Ditto craig's comments, though, on looking for the Holy Grail of punditry. 

[moda0306]

Just knowing about the permanent portfolio, without significant ability to invest in it due to my limited finances, helps me ignore the stupid articles about bonds/stocks/real estate/gold, etc.  Even the ones that prove themselves right once-in-a-while are more lucky than anything.  People have been talking about the collapse of the dollar since the 70's, the lack of gold's intrinsic value since god-knows-when, and the stock market was supposed to hit 3,000 in 2009 according to Glen Beck.

While others are suffering numerous health issues as a result of undue stress, I consider us the lucky few that have stumbled into and taken the time to digest the PP.  I think it's rough exterior will haunt others for decades to come and it will continue to post amazing results.

[MediumTex]

Who do you read regularly?

I read a lot of different sources, but Contary Investor does a free market commentary that comes out on the first of every month that I never miss.  It's always informative.

http://contraryinvestor.com/mo.htm

This month's Contrary Investor is really good (link above).  It discusses what would need to happen in order for QE to stop and not plunge the economy into a deflationary cauldron.

It's a good analysis that isn't overly alarmist.

Here's a snip:

You are fully aware that Bill Gross is now asking a relatively important question.  Just who or whom will be the buyers of US Treasury debt once the Fed ends QE2?  We're simply trying to ask an adjunct question we believe likewise worthy of contemplation.  Who or whom will pick up the credit cycle acceleration slack if the US Government slows its borrowing in any meaningful manner ahead?  US non-financial sector debt relative to GDP remains at an all time high.  Any contraction in this key relationship will imply credit cycle contraction/deflation.  The analysis above suggests to us that state and local governments as well as US households are in no position to or have no desire to leverage up in any meaningful manner, especially set against what we've seen in the magnitude of Government debt growth even over the last few years alone.  Non-financial sector corporations will necessarily act in their own bests interests and really cannot be induced to borrow.  How does the Government stop levering up and not induce a contraction in macro non-financial sector debt to GDP that really defines current the macro credit cycle of the moment?  Up to this point in the current cycle as per the message of historical non-financial sector debt to GDP, the Government has done a masterful job of maintaining macro credit cycle stability.  Could all of this change dead ahead?  You better believe it could.  In like manner, the Fed and Federal Government may quickly come to find out the ramifications of a potential decline in non-financial sector debt to GDP in the latter half of this year.  QE3, more government borrowing to come?  What would all of this mean for the already sick US dollar, precious metals, commodity prices, etc?  This is all part of the greater equation.  We suggest to you that this set of dynamics will be critical over the remainder of this year and into next.  Bernanke's worst nightmare must be the potential for contraction in macro US non-financial sector debt relative to GDP.