As promised, my column setting the record straight on inflation is up, titled The Truth About Inflation. Regular readers of this blog will no doubt recognize most of the content in the article from prior discussions.
Here’s an excerpt from the conclusion:
"It is crucial for investors to have a realistic understanding of how robust inflation is. Doing so early reveals investment opportunities that those who focus on the core CPI have missed. In particular, oil, commodities and gold have been attractive investments overlooked by the "no inflation" crowd.
Now, as the Fed rate tightening cycle goes from being accommodative to neutral and beyond, the risk to domestic equity holders increases. I have been advising clients that as we come to the end of 2005, they should be getting increasingly defensive. In addition to owning gold, they should be looking to increase their exposure overseas.
Those who live in a synthetic reality — seasonally adjusted, hedonically altered — will confront the unpleasant reality of the real universe. Ignoring inflationary data in the CPI won’t make it go away. All that accomplishes is to shift the focus away from precisely where it should be: on the part of CPI that has been rapidly increasing in price.
Those who fail to grasp this will pay a heavy price for their self-imposed ignorance."
That about sums it up. (Note: I expect this will get eventually moved to the free side of TheStreet.com . . .)
The Truth About Inflation
RealMoney.com, 10/22/2005 8:00 AM EDT
Its moved over to the free site, where the truth apparently has become unpleasant:
The Unpleasant Truth About Inflation
RealMoney.com, 10/23/2005 10:27 AM EDT