Blockbuster piece by Holman Jenkins on James Grant in this weekend's Wall Street Journal. Simply a must-read even if you -- like me -- eagerly consume anything you come across in the media by or about the premier financial journalist of our time.
You'll see plenty of interesting stuff about Grant's background and, of course, the sorry state of Central Banking, the US dollar and fiat currencies in general.
But you'll also find perhaps useful information on Grant the investor, including past victories and what he sees now:
When Treasury bonds were yielding 13% in the early 1980s, Grant's called them a screaming buy. If inflation, then coming down, suddenly ran amok again, an investor could give up 13% a year in principle and still break even on the coupon.
Likewise, before the housing crash, he took a hard look at subprime mortgage securities and urged investors to short them. "They were then selling at 100 cents on the dollar," he now says. "If we were wrong, they might go to 101 or 102. If we were right, they'd go down a lot."
"We are looking at a bunch of these big cap, astoundingly cheap American enterprises that are hiding in plain sight. Wal-Mart is one, J&J is another," he says. Wal-Mart he describes as a mature business whose per-share earnings are those of a growth company, thanks to its massive share buy-backs.
"We can observe that the dividend yield [on many blue-chip U.S. companies] is a match for most points on the Treasury yield curve. But their managements are adaptive, unlike the inert Treasury bond that you buy for so-called safety."
I don't own Wal-Mart or J&J, but I do hold some Microsoft (MSFT). I like to think MSFT has a bit in common with the big caps Grant's thinking of. Maybe I should do more "hiding out" in those kinds of stocks.
Read the entire interview here if you subscribe to WSJ.com.