What sectors will do best in an inflation era?

[BG2008]

Thank you Spek and Bizaro, I seriously thought I was the one losing my mind

[thowed]

Is it because it seems too easy? 

 

I think undoubtedly, yes.  I've definitely been guilty of this, when I look at my past errors.

 

Knowing how many smart people there are in the game, I would think that a solution that is so seemingly so obvious couldn't possibly work, and look for something 'cleverer'.  Five years later, the obvious thing had done much better than I had.

 

And if you're the sort of person who's an intellectual snob, you may keep doing it, which is why I think humility and 'rubbing your nose in your mistakes' per Munger is so important for an investor.

 

Separately, if people realise that sometimes the solution is simple, then it puts financial advisors in trouble!

[DooDiligence]

Is it because it seems too easy? 

 

I think undoubtedly, yes.  I've definitely been guilty of this, when I look at my past errors.

 

Knowing how many smart people there are in the game, I would think that a solution that is so seemingly so obvious couldn't possibly work, and look for something 'cleverer'.  Five years later, the obvious thing had done much better than I had.

 

And if you're the sort of person who's an intellectual snob, you may keep doing it, which is why I think humility and 'rubbing your nose in your mistakes' per Munger is so important for an investor.

 

Separately, if people realise that sometimes the solution is simple, then it puts financial advisors in trouble!

 

William of Ockham was a stud.

[BG2008]

Thanks for the feedback guys.  I have noticed that Gold newsletters sells.  Some sort of exotic custom strategies piques people's interest.  It really resonate with people.  There is ideology involved and all.  After over 10 years in this game, you notice a thing or two.  Back in 2008/2009, I certainly bought into the bear camp which I learned the hard way is correct once every 7-10 years. 

 

Now, I am not saying you will do amazing with Laacz over the long run.  What I am saying is that if you want inflation protection, if that's precisely what you want, then it is one of the best instruments to protect you.  This is especially true if you are someone who needs income.  It is one of those widows/orphans stock that will likely live up to its billing and it is a great inflation hedge.  It is frustrating for HF managers to own because the management team is so conservative. 

[wabuffo]

I find it fascinating that every time we have a big crisis, people start worrying about inflation and deflation at the same time....

 

I am a little surprised that people are a lot more intellectually interested in papers and theory....

 

It is weird that when people are handed very valid solutions to their problems, Laacz, they kind of ignore it and instead try to go on some sort of philosophical search....

 

I have noticed this kind of indifference both on this message board and elsewhere.  It's puzzling to me....

 

What I am saying is that if you want inflation protection, if that's precisely what you want, then it is one of the best instruments to protect you.

 

From 9/1/2008 - start of GFC thru next 4 years (using the deficit-to-gdp as the key indicator)  GLD vs LAACZ.

 

 

From 9/1/2008 - to today (though in fairness, I switched out of GLD in 2014 after deficit-to-gdp ratio fell under 4%).

 

 

Look - I always prefer to own businesses than a shiny metal so not a fair comparison.  And people should only invest in things with which they are comfortable. 

 

Inflation protection to me means protection from currency debasement.  So right now, for the cash portion of my portfolio, I prefer GLD to cash.  Reasonable people can disagree on this, of course, but still respect the opinion of others because there are many paths to investment success/capital preservation.

 

wabuffo

[BG2008]

I think if you add up the dividends that you got during this time, LAACZ will beat GLD

 

Distributions were

 

2009 - $42

2010 - $46

2011 - $47

2012 - $47

2013 - $56

2014 - $65

2015 - $80

2016 - $80

2017 - $81

2018 - $85.50

2019 - $93.50

2020 - $25 or $50

 

$748 to $773 in total distributions during this period.  This adds 56% in returns.  If you bought more units, this figures will likely be higher over time.  You get income versus no income for GLD.  Total return would have been roughly 110% versus roughly 100% for GLD from 9/1/2008. 

 

LAACZ

9/1/2008 6/30/2009 7/1/2010 7/1/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/29/2016 6/29/2017 6/29/2018 6/29/2019 6/15/2020

-1345 42 46 47 47 56 65 80 80 81 85.5 93.5 2075

7.5%

 

GLD

9/1/2008 6/15/2020

-79.2 162.6

6.3%

 

 

If we use a starting point of 2009 after Laacz traded down significantly and GLD has traded up after the market low of March 2009

 

7/1/2009 6/15/2020

-92.4 162.6

5.3%

 

 

7/1/2009 9/30/2009 10/1/2010 10/1/2011 9/30/2012 9/30/2013 9/30/2014 9/30/2015 9/29/2016 9/29/2017 9/29/2018 9/29/2019 6/15/2020

-930 21 46 47 47 56 65 80 80 81 85.5 93.5 2075

12.5%