Paulsen: Cocktail of Factors May Spark Inflation Fears In 2014

Could 2014 finally be the year that long-simmering inflation fears boil over? Wells Capital’s Jim Paulsen thinks it just might be. “In the last five or six years we’ve been worried about nothing but deflation and weak growth,” Paulsen tells Yahoo Finance’s Breakout, “so it’s very difficult to imagine that we might get to a point where we’re worried about an overheated economy again, but I think we’ve got a shot at that (this year).”… Read More

Bond Guru Offers Counterpoint to Inflation Argument

Jeffrey Gundlach thinks interest rates will soon rise, but, unlike fellow bond guru Bill Gross, he doesn’t think inflation is upon us. Gundlach, in a web seminar, recently said that a paradigm shift has occurred in the past five years or so, according to AdvisorOne. “Over the majority of the [past three decades or so] we’ve seen a benign inflation period characterized by stable to falling interest rates,” he said. “It’s quite likely interest rates… Read More

PIMCO on Why Inflation Will Rear Its Head

Top fund manager Mihir Worah of PIMCO says not to be lulled into complacency by the low inflation we’ve seen in recent years. “We expect global inflation over the next three to five years — or even the next five to 10 years — to be higher than it has been over the last 20 years,” Worah says in an interview posted on PIMCO’s site. “While we do not expect double-digit inflation, we do see… Read More

Einhorn Ups Bullish Bets, But Warns on Inflation

Hedge fund guru David Einhorn says he increased his bullish bets last month, but remains concerned about several issues, including the Federal Reserve’s low-interest rate policy. In a conference call with Greenlight Capital Re investors, Einhorn said that he increased his bullish positions thanks to better-than-expected corporate earnings results, Bloomberg reports. But, he added, “This enthusiasm is tempered by our continued concern about the structural sovereign-debt problems in Europe and Japan, a slowing Chinese economy,… Read More

More On Inflation And Asset Allocation

Last week, we highlighted a MarketWatch column that referenced a new study showing that stocks, against conventional wisdom, have actually served as poor hedges during periods of marked inflation. But a closer look at the study shows that that is far from the whole story. The study was performed by Elroy Dimson, Paul Marsh, and Mike Staunton of the London Business School, who over the years have performed some of the most in-depth research ever on… Read More

An Industry That Can Beat Back Inflation

In his latest column for RealMoney.com, Validea CEO John Reese says inflation can be a big hindrance to good investing returns, and highlights one industry — pharmaceuticals — that has the power to beat back inflation. “If inflation were Wile E. Coyote then its Road Runner might well be the pharmaceutical industry,” Reese writes. “An AARP study found that of drugs used most by older Americans, prices rose nearly 26% from 2005 to 2009, which… Read More

Are Stocks Really A Good Inflation Hedge?

Conventional wisdom is that stocks are a good hedge during inflationary periods. But some prominent financial researchers say the belief is off the mark. “When inflation has been moderate and stable…equities have performed relatively well,” Elroy Dimson, Paul Marsh, and Mike Staunton of the London Business School write in the 2012 Credit Suisse Global Investment Returns Yearbook, according to MarketWatch’s Howard Gold. “When there has been a leap in inflation, equities have performed less well… Read More

Buffett: Productive Assets Like Stocks Offer Most Safety — Not Bonds

Over the past few years, investors have poured into low-yielding Treasury bonds, perceiving them as the safest place to be during the global economic tumult. But, according to Warren Buffett, bonds are one of the most dangerous places for investors to put their money over the long term — and that’s not going to change. “The riskiness of an investment is not measured by beta (a Wall Street term encompassing volatility and often used in… Read More