A. Gary Shilling

[Guest kawikaho]

Anyone ever subscribe to his Insight newsletter?  Any thoughts or opinions on this guy?  He seems to be prescient in his calls:

 

http://www.agaryshilling.com/

[UhuruPeak]

AGS has been calling for deflation since the early 80s or so, when he correctly figured the rates would go down long term (dis-inflation). I read his book (one of his books, but they are all the same) and like to read him when I get a chance - mostly to get thought-provoking moments however, not necessarily to heed his advice.

 

 

 

I don't know his track record, but wouldn't be surprised if he had handily beat the markets for 2 or 3 decades now.  His fairly advanced age also gives him a long personal investing experience to draw from.

 

 

Finally and fwiw, John Mauldin regularly includes a letter from AGS in his weekly "outside the box" letter.

[Guest kawikaho]

Much thanks for the info.  Yeah, i'm very curious about his track record, since he does make substantial claims about long term t-bonds.  So, he's been calling for deflation for the past 25 years??  Is he like one of those perma-bear types?

[Mungerville]

Those calling for long-term bond types for 25 years have been perma right as the long bond has outperformed the stock market for 20 years.

[UhuruPeak]

Those calling for long-term bond types for 25 years have been perma right as the long bond has outperformed the stock market for 20 years.

 

Can't you make that 25 or 30 years?  But I agree Mungerville, he has been perma-right.  I remember learning about him around '00 and seeing the leverage that long bonds would have in a decreasing rate environment (like 20% upside for 1% rate decrease for the duration I was looking at back then) - like an idiot/rookie/whatever, I decided I could do better in high tech small caps at the time.  Needless to say, my prediction ability only matched my portfolio returns. :)  It would take me another couple of years before deciding that the Buffett way was the right way; in the mean time, the lesson was expensive!

[Guest kawikaho]

Looks like I need a course on long term bonds.  I was always under the impression that the bond prices were affected by the yield, and that the yield, although declining, could only move so far.

[UhuruPeak]

Looks like I need a course on long term bonds.  I was always under the impression that the bond prices were affected by the yield, and that the yield, although declining, could only move so far.

 

 

Well, yes you are right - the yield will only move so far; the big move is in the price however: if rates go from 6 to 5, the price of your formerly-6% bond will jump up to the point where it now only yields 5%.  As a bond-holder, you now sit with a healthy profit...

[Guest kawikaho]

Right... so, to get a zero yield, prices will need to go MUCH higher, correct?  Since the price is inverse to the yield, wouldn't the price need to be infinity to get a zero yield???  And now with the talk of the yield going negative... holy shit.  What would the price of the long term T bond be?? 

 

Wow, looks like Gary Shilling was definitely perma-right on his call.