Inflation/deflation - The Big Debate

[Abrak]

inflation / deflation

question: where's the beef as far as any inflation/deflation impact on other posters is concerned?

Well I dont have a job to speak of apart from advisory work and Directorships. I look at all my assets principally as investments although a couple of houses which I live in, I dont exactly put in the home theatre hoping to get my money back. I have way too many properties (although mostly distressed asset sales off the banks), quite a lot of equity (principally a minority stake in a listed company I sold out of.) These are my fairly fixed longer term holdings, mostly in Thailand. Deflation will be a disaster, inflation helps up to a point (speeds up real adjustments, rents/eps move with nominal P but yield trend higher as do interest rates (nominal, real likely to fall.) Best case for this lot is a return to decent growth also least likely.

So with my investments the one thing I dont have to hedge is a return to growth. I hedge Thailand at the moment but my liabilities are here, I understand the place and make my best returns, so I dont see it as essential. Both equities and housing is going to get crushed by deflation due to falling nominal income on the assets. Bonds should do well but I hate them and ultimately there must be a credit risk (Japanese bonds look vulnerable with savings turning negative.) I consider my holdings in PMs as a hedge against both deflation and inflation. Their poor performance over the last year doesnt bother me - they did pretty well considering the investment case for them totally evaporated.

I am still looking for a 5/10 year option on deflation. I would like to hold that and far less cash.

[Naam]

What about Hyperinflation??

nothing to worry about. hyperinflation will be compensated by deflation. dozens of gurus predict inflation, dozens of gurus predict deflation. logical result = neither nor. now waiting patiently for the next five dozen gurus to appear on the stage and predict stagflation and a new generation of voodoo priests who will scare the living bejesus out of naïve ignorants by forecasting hyperstagindeflation² (any time from now).

[signed Naam... who's striving to be the most hated poster on ThaiVisa ]

Naam do you mean the "most hated" or "the most read" ?

i have no idea how many are reading my postings and i am definitely not striving to be one of the most read posters. if the latter was the case i'd open a couple of threads or polls every day with topics such as:

-bloody xenophobic thai neighbourhood is chanting buddhist songs and disturbing my peace,

-where can i buy top quality <insert product> but must be cheap?

-why do Thais speak a funny language?

-i want to open a <insert name> business. until recently i was a shepherd in <insert country> with <insert number> years of experience. what would you suggest?

-cheapest way to transfer 29.95 dollars from Australia to Isaan please?

-how much money do i need living in Thailand?

-best british, american, french, german, italian <delete all not applicable> breakfast in Nakhon Nowhere?

-my motorcycle has 7½ horse powers. how to increase to 8 hp?

-melting polar icecaps will flood Bangkok!

-poll: is Abhisit gay?

-poll: do you use a bumspray/bidet after shitting or do you spread any remnants evenly with toilet paper?

-a soi dog tore my trousers. whom do i sue and can anybody recommend a good lawyer?

-warning! xyz restaurant added an additional bowl of rice, which was never served, to my bill. let's boycot them!

-i am <insert number of years> old. what second hand car should i buy?

[lannarebirth]

inflation / deflation

question: where's the beef as far as any inflation/deflation impact on other posters is concerned?

Well I dont have a job to speak of apart from advisory work and Directorships. I look at all my assets principally as investments although a couple of houses which I live in, I dont exactly put in the home theatre hoping to get my money back. I have way too many properties (although mostly distressed asset sales off the banks), quite a lot of equity (principally a minority stake in a listed company I sold out of.) These are my fairly fixed longer term holdings, mostly in Thailand. Deflation will be a disaster, inflation helps up to a point (speeds up real adjustments, rents/eps move with nominal P but yield trend higher as do interest rates (nominal, real likely to fall.) Best case for this lot is a return to decent growth also least likely.

So with my investments the one thing I dont have to hedge is a return to growth. I hedge Thailand at the moment but my liabilities are here, I understand the place and make my best returns, so I dont see it as essential. Both equities and housing is going to get crushed by deflation due to falling nominal income on the assets. Bonds should do well but I hate them and ultimately there must be a credit risk (Japanese bonds look vulnerable with savings turning negative.) I consider my holdings in PMs as a hedge against both deflation and inflation. Their poor performance over the last year doesnt bother me - they did pretty well considering the investment case for them totally evaporated.

I am still looking for a 5/10 year option on deflation. I would like to hold that and far less cash.

Holding cash seems like a problem at present, I'll grant you, but just like your PM, I think one needs to have a certain amount on hand. What percentage of total assets that should be I do not know and which currency it should be I do not know, but perhaps two which are inversely correlated. On the 5-10 year deflation front, maybe 1% of assets could go to LEAP puts on US or Global broad market indexes and another 1% in LEAP puts linked to RE tracking indexes. If those don't pay out it will probably mean your other assets have appreciated far more over that time period.