Notes from the DoubleLine Lunch with Jeffrey Gundlach

[biaggio]

http://www.thereformedbroker.com/2011/09/29/notes-from-the-doubleline-lunch-with-jeffrey-gundlach/

 

"Reagonomics and the idea that you could use deficit spending to "prime the pump" took hold in the early 80's.  One of the unintended (or perhaps intended) consequences has been a massive increase in the top .1% of earners' share of total income.  When factoring in capital gains, the top 1% of earners in this country are now 25% of total income.  This means that some kind of wealth tax is almost a certainty going forward....

 

On Asset Allocation for the Ultra High Net Worth:  Jeffrey says his own assets are now 2/3rd's outside of the "financial system" other than his ownership stake in DoubleLine.  This means fine art, gold, gemstones, rental property etc.  He says the ultra wealthy should have 50% of their assets outside of the financial system."

 

" Natural gas is very cheap and has a lot of potential in the long-term."

[Packer16]

I am tired of folks blaming others for the large income disparities.  If you look at history, the keys can be found.  What has increased income equality is a scarcity of labor (historically from either war, famine or others following regressive labor policies (communism)) or the country nationalizing a valuable commodity asset and more equally distributing the wealth.  Since WW II we have reduced what has primarily created income equality (wars, famine and large portions of the world following communism) in general.  These are good things we just need to realize the effects these actions will have versus the past. 

 

Scarcity of labor in particular fields where demand is higher than supply (science and engineering), which will cut down on income inequality, has not been addressed by our education and government leaders.  If you look at these fields it is populated by many foreign students.  Why is that?  In part, due to the lack of incentives provided to US students to pursue those fields.  The education "subsidy" (grants and low interest rate loans) the US gov't supplies to all citizens should somehow be related the types of field studied.  The engineering and science sudents should pay less to incentivize them to study these fields until the % of US students in these majors is increased to levels of other majors. 

 

Another misallocation of resources is subsidized "green" technology as it is focusing the science and technology labor we have on uneconomic research and causing a further labor shortage in this area.  As an aside, what I find incredible is that the major benefactor of "green" technology subsidies and spending are the rich and college educated not the poor and middle class.  If they are rich and college educated do they really need more gov't money?

 

I think the focus of income inequality efforts should be on training folks where the labor shortages are.  As this is the most direct way to address this issues.

 

Packer

[biaggio]

I think large income and wealth disparities are a natural consequence of a competitive free market i.e there are good reasons why you have income + wealth disparity as you noted.

 

I thought his point was that there is an income and wealth disparity and that there was a risk that the smart guys in the government will try to redistribute or even it out with some sort of wealth tax + he was advising to keep 50% of your assets in things (art, precious metals,gems) that would protect/shelter you from this.

[Packer16]

You are right.  However it is ironic that what he wants folks to keep there wealth in has little or no economic benefit (it is the equivalent of taking money and burying it in the ground).  So maybe a better solution is to have a high "thing" tax to keep the money moving.

 

Packer

[Myth465]

Becoming a big fan of Gundlach, I think he is spot on regarding asset allocation for the wealthy.... Its what I would do.