I haven't been blogging as much lately, mostly because I've been swamped with other duties. And doing anything with my portfolio has been non-existent as well. And I feel good about that for now.
You see, with all that's going on in the world (read: Major Uncertainty), my equities/gold/gold miners/cash position continues to give me comfort. Whether that holds or not, we'll see.
But I continue to read, read, and read some more. Value investors love to read and I'm certainly no exception. One of the best reads lately has been the Levy Harkins Q2 letter to investors.
Part of it reads:
Our greatest vexation is that a long held past prediction of ours is coming true, and it gives us not one whit of joy. We mean that inflation is now here, and visible to any and all who want to see it. The American Consumer Price Index is up 3.6% year over year, and this is even with the government’s blatant attempt to manipulate the oil market. The UK is much worse, as is China and sundry third world markets. The common refrain from the authorities that, “3.6 percent isn’t all that bad,” misses the point entirely. There never was a stable inflation rate, certainly not one of that size. Inflation is a process, often thought to be disease like, where you are either getting better or worse. With the Federal Funds Rate at 0, there is near certainty that worse is likely, since negative real interest rates stoke the fever. Only when real rates get positive, that is the Funds rate gets meanfully above the inflation rate, can improvement be hoped for.
They go on to mention the book, When Money Dies: The Nightmare of Deficit Spending, Devaluation, and Hyperinflation in Weimar Germany. Some of what Levy Harkins says about it is this:
What is startling about Ferguson’s book was that he wrote it in 1975. He couldn’t have known anything about Lehman Brothers, Quantitative Easing II, the Euro, or any of it. He was almost closer to Weimar than he is to our own time. Yet the pressure on R.A. Havenstein as President of the Reichsbank to print money in the early 1920’s is eerily similar to what we read today regarding Bernanke and Trichet.
Food for thought.