Excerpt from King World News:

Rob Arnott continues:

“If they have a triple mandate in which sharp stock market declines aren’t allowed, then that just becomes impossible.  It’s an interesting note that during the Weimar hyperinflation in the 1920s, stocks soared.  Stocks did brilliantly, but not in real terms.

They (stocks) didn’t keep up with inflation.  But stock market rallies were very common and very large, measured in plunging reichsmarks….

“So there are interesting lessons to be learned from history.

I think most investors have most of their money invested in mainstream stocks and bonds.  The problem is really simple.  Stocks are there to provide participation in macroeconomic growth.  Macroeconomic growth is likely to disappoint, and so that pillar for investors becomes a weak pillar.

The second pillar for most investors is investments in mainstream bonds for reliable income, and to pull down the overall volatility of their portfolio.  Well, if yields are close to zero, that pillar is a pretty weak pillar.

So what we are left with is building a third pillar, which consists of diversifying away from mainstream stocks and bonds, and buying assets that can be inflation protected.”


The Greatest Fear Of A $100 Billion Asset Mgr. Going Forward