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Mish shedlock wine country conference 2013


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Mish shedlock wine country conference 2013

  1. 1. Brief Lessons in HistoryMike “Mish” Shedlock
  2. 2. 2Today’s Topics• Valuations• The Inflation Deflation Debate• A few investments look attractive• Patience and why you need lots of it, especially right now.
  3. 3. 3If you are hugely long this market…• Valuations say you shouldnt be• Margin debt says you shouldnt be• History says you shouldnt be.
  4. 4. 4Jeremy Grantham, had some pertinent comments inan interview with Charlie Rose on March 11, 2013.• "There is an enormous pressure in the investment business to deliver good news.”• “Trust me. Good news sells better. Stockbrokers thrive on it, investment houses thrive on it.”• “To go out there in a bubble and talk about badly overpriced markets is an invitation to get fired.”
  5. 5. 5"Real" Inflation-Adjusted 10-Year Average Earnings Growth Source: Robert Shiller, Sitka Pacific Capital Management
  6. 6. 6Projected PE Ratios Based on Demographic Trends
  7. 7. 7 Myths That Don’t Add Up• Forecast of current earnings• The idea the Fed can keep inflating asset prices perpetually• The idea that gold is overvalued
  8. 8. 8Federal Reserve Balance Sheet vs. Gold
  9. 9. 9"Great Moments in Fiat History”
  10. 10. 10Source: Robert Shiller, Sitka Pacific Capital Management, LLC
  11. 11. 11The Inflation/Deflation Debate• Do we have inflation or deflation?• Which one?• What direction from here?
  12. 12. 12CPI-U Percent Change Year-Over-Year
  13. 13. 13Component Price Inflation
  14. 14. 14Comparative Growth in HPI vs. OER
  15. 15. 15Fed Funds Rate vs. CPI and HPI-CPI
  16. 16. 16Beware the CheerleadersBeware the Cheerleaders
  17. 17. 17What about the Yen and Nikkei?
  18. 18. 18 The Case for Cash and PatienceCash earns nothing, but it also loses nothing unless inflation isrunning rampant (and it isn’t).History suggests waiting for better opportunities is the prudentthing to do.I cast my vote with history.Mike “Mish” Shedlock