Tuesday, June 12, 2012

Harvard Economist has Portfolio Set for Destruction

Harvard economist Greg Mankiw writes:
My own asset allocation remains 60 percent stocks, 40 percent bonds
The 10-year Treasury bond currently yields 1.60%. This is a bigger bubble than the housing market. Many, many Americans are being sucked in to Treasury securities as a supposed safe haven. Treasury bonds are not a safe haven. When price inflation heats up, the value of these bonds will crash and a wait until maturity will mean pretty much no income and a payout in severely depreciated dollars.

Never follow a Harvard economist into an investment.

8 comments:

  1. Other than Lawrence Summers, it couldn't happen to a nicer guy.

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  2. Governments around the world are imploding with debt, and this guy puts 40% of his portfolio in bonds? Ha!

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  3. Sometimes I feel sorry for these clueless Keynesians. I mean they work, get paid and then lose all the money in these wrong investments. Be it housing, financials, bonds, whatever. And then they go back to work, get some more money and lose it again. What a vicious circle.

    PS: I don't really feel sorry for them.

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  4. What are some thoughts on how to allocate a 401(k) in a time like this? The most conservative choice within my options would be a money market fund, which (considering the times we are in) may not even be all too "conservative." On a somewhat related note, what is a good outfit through which I could purchase gold?

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  5. Mankiw should take a page out of old master Keynes' book and scooch right up next to the seats of power if he ever hopes to make a profit front running government intervention.

    If not, I eagerly await his re-enactment of Irving Fisher's 1929 double-down.

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  6. RE: Anonymous

    APMEX, Provident, and goldsilver.com are all reputable gold dealers. 401k? Don't contribute any more than the minimum to get the matching - some would say stop contributing altogether though. And if you can manually allocate make sure you are not in any bond funds.

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  7. Anonymous @11:38, is your disdain for 401k accounts simply the generally poor and limited choices of investments available? Or concern of future taxes assessed against 401k balances? Or concern of future coercion of "Good News! All 401k monies must now be invested in US Government Retirement Bonds!"?

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  8. It's time to stop playing nice with these statists. Forgo the decorum and tell it like it is: they are frauds, liars, shills. They know that their alleged beliefs are destructive and ass-backward, yet they peddle them for political and financial gain anyway. No more creative criticism: be blunt with these scumbags who would m*u*r*d*e*r you for a little power n' profit if they could get away with it.

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