I am back from Rob Arnott’s conference in Laguna Beach, and I must confess that if I had attended it before I wrote last week’s e-letter I might have had lower odds on the US political class solving the debt crisis, absent a real economic crisis forcing them to. There were several presentations that made the problems quite clear. It remains a tough issue.
This week’s Outside the Box is a recent white paper by Rob, where he argues that the traditional way we look at GDP is flawed, because it overstates what is happening in the real, private part of the economy, which is the productive part. Government spending is either money collected from the private sector in the form of taxes or borrowed money that future generations must repay. While not likely to become a mainstream economic view, this is very useful for our own thinking about what constitutes productivity and investments. This is a short but powerful piece from one of America’s most honored economic writers.
And let me note that I will
be speaking at the annual Agora Financial Investment Symposium, perhaps the
only conference in the country where I am the bull in the crowd. It is July
26-29 in Vancouver. You can find out more and register at http://www.agorafinancial.com/
Have a great week. It is good to be home. I am off to see the Texas Rangers, after a happy hour with David Tice of Prudent Bear fame. And I must say that watching the Mavericks-Lakers game Sunday from the Admiral’s Club in LA, while waiting for my plane, was quite fun. Not as good as being there, but fun!
Your trying to remember there is more to life than economics analyst,
Today's "Outside the Box" will be a combination of 2 different writings. The 1st is an email that I received from Research Affiliates Chairman Rob Arnott in response to my letter last Friday, "Honey, I Created a Bubble." The 2nd is the latest article by the well-known fund manager, John Hussman. Upon reading both commentaries, I was struck by the similarity between the two. It behooves us to pay attention when two very intelligent gentlemen that both actively (and successfully!) manage billions of dollars are marching to the beat of the same drum.
For those of you who are unfamiliar with Rob and John, let me say that both have stellar credentials. Rob is Chairman of Research Affiliates where he manages a multi-billion fund for PIMCO. In addition, he is editor of the Financial Analysts Journal and creator of a new index fund concept. John is the President of Hussman Investment Trust where he manages the Hussman Strategic Total Return Fund - HSTRX and the Hussman Strategic Growth Fund - HSGFX.
In their commentaries below, both Rob and John take a look at what inflation and bond yields mean for the market. I strongly recommend that you read each piece thoroughly and hope that you will find them to be "outside the box."