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September ETF Cash Flows - NSX
Here's a glimpse showing where the big money is moving (as seen in the "Top 10 by Size" section).
1. SPDR Gold: +$12.255 Billion YTD, +$2.005 Billion in September
2. iShares Barclays TIPS: +$7.032 Billion YTD, +$0.847 Billion in September
...
10. SPDR S&P 500: -$29.725 Billion YTD, -$1.795 Billion in September
Stagflationary thoughts... they aren't just for breakfast any longer.
On the other hand, the markets can't inflict the maximum pain on the maximum number of investors without first properly aligning the maximum number of investors. In other words, just because the trend has been consistent, past performance is no guarantee of future returns.
Take my inflation protected TIP fund for instance (seen above). The distribution for October came in at just $0.04744 per share but the fund closed the day at $102.97 (above its long-term trend). In order to justify the current price, there better not be any more deflation.
I am comfortable in TIP long-term but... we are heading into Christmas with rising (and extremely high) unemployment. More deflation is a distinct possibility.
Real Estate Newsletter Articles this Week: Existing-Home Sales Increased to
4.15 million SAAR in November
-
At the Calculated Risk Real Estate Newsletter this week:
[image: Existing Home Sales]*Click on graph for larger image.*
• NAR: Existing-Home Sales Increase...
12 hours ago
5 comments:
Mark,
you have to check out Mish's last post about Japan making a moratorium on all payments on loan principle and ineterest for both business and personal. More vanished money. Bond buyers are just not going to collect on loans backed by assets that have much less "worth" than thought. Deflationary, yes. Calls into question "wealth" and what it is backed by, absolutely.
GYSC,
You nearly scared the you know what out of me. Next time say "business and personal" first! The "moratorium on all payments" made me think the government just defaulted on ITS debt! D'oh!
That said, you and I are pretty much in the same boat these days.
I can easily imagine gold losing half of its value (if serious deflation appears and oil drops to $20). In fact, it would still be more expensive than it was in 2004 (when I felt uneasy buying it but did anyway, only to sell it in 2006 for a pretty darned good profit).
On the other hand, I could easily imagine those shorting gold losing everything (if inflation picks up). Similarly, I can easily imagine TIPS losing ALL of their value at these prices too (if hyperinflation appears).
Perhaps I have an active imagination. If true, that's probably a good thing. Without an active imagination how could I stay grounded in reality? Weird logic, huh?
I could imagine pain in dotcom stocks and I could imagine pain in the housing industry. I can now imagine pain in the restaurant industry even as others say the worst is over. I can imagine that solving a debt crisis by throwing more debt at it is probably not going to work long-term. Go figure.
"Calls into question "wealth" and what it is backed by, absolutely."
I can't easily imagine toilet paper losing half (or ALL) of its value at these prices. I therefore continue to stick with the theory that it is THE safest investment for the future. Further, toilet paper IS actually backed by something. More toilet paper! That's why it is 2-ply! Hahaha!
Too bad I can't protect all my wealth using toilet paper though. Most other alternatives are gambles that apparently require fantastic tea leaf reading skills and/or a one-hour free trading seminar on trading strategies so that I can go head to head with Goldman Sachs professional traders on an equal footing, lol.
And lastly, I swear if one more guy shows up on TV financial news and tells me unemployment is a lagging indicator and then compares what we are experiencing to the average recession (before "Made in China", before our massive debt, before our massive trade imbalances, and before our productivity miracle induced wave of permanent job destruction) I'm going to go even more postal than I already am. And when I say postal, I actually mean that I also hoard forever stamps, lol.
Mark,
forget jobs as a lagging indicator, the new paradigm is that jobs are a bonus, but not needed for an economic recovery. I love this new model!
One more thought.
Forever stamps were introduced in April of 2007 for 41 cents each.
As of today, they are worth 44 cents each.
That's a 7.3% return on my investment. I feel SO much richer now. Here's the fun part. Although it is technically a capital gain, I will never need to pay capital gains tax on my illusionary profits. I won't be reselling them to others.
I'll simply be "licking" inflation by sheltering my "enveloping" profits!
Bumper sticker idea...
Lick Inflation Now!
http://en.wikipedia.org/wiki/Whip_inflation_now
GYSC,
It's going to be the mother of all jobless recoveries.
http://www.ajc.com/business/jobless-number-is-the-153966.html
"And then we get the Mother of Economic Indicators, unemployment, and it looks like the edge of the cliff again."
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