Best of the Week
Most Popular
1.Are UK Savings Interest Rates Finally Starting to Rise? Best Cash ISA 2017 - Nadeem_Walayat
2.Inflation Tsunami - Supermarkets, Retail Sector Crisis 2017, EU Suicide and Burning Stocks - Nadeem_Walayat
3.Big Moves in the World Stock Markets - Big Bases - Rambus_Chartology
4.The Next Financial Implosion Is Not Going To Be About The Banks! - Gordon_T_Long
5.Why EU BrExit Single Market Access Hard line is European Union Committing Suicide - Nadeem_Walayat
6.Trump Ramps Up US Military Debt Spending In Preparations for China War - Nadeem_Walayat
7.Watch What Happens When Silver Price Hits $26...  - MoneyMetals
8.Stock Market Fake Risk, Fake Return? Market Crash? - 2nd Mar 17 - Axel_Merk
9.Global Inflation Surges, Central Banks Losing Control and Triggered the Wage Price Spiral? - Nadeem_Walayat
10.Why Gold Will Boom In 2017 - James Burgess
Last 7 days
Foundation – Fall Of The American Galactic Empire - 27th Mar 17
Stock Market More Correction Ahead - 27th Mar 17
US Dollar Inflection Point - 27th Mar 17
Political Week Presurres US Stock Market - 25th Mar 17
London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - 25th Mar 17
Will Washington Risk WW3 to Block an Emerging EU-Russia Superstate - 25th Mar 17
Unaccountable Military Industrial Complex Is Destroying America and the Rest Of The World Too - 25th Mar 17
Silver Mining Stock Fundamentals - 24th Mar 17
A Walk Down the Dark Road of Bad Government - 24th Mar 17
Is Stock Market Flash Crash Postponed Until Monday? - 24th Mar 17
Stock Market Bubble and Gold - 24th Mar 17
Maps Of Past Empires That Can Tell Us About The Future - 24th Mar 17
SNP Independent Scotland's Destiny With Economic Catastrophe, the English Subsidy - IndyRef2 - 24th Mar 17
Stock Market VIX Cycles Set To Explode March/April 2017 – Part II - 23rd Mar 17
Is Now a Good Time to Invest in the US Housing Market? - 23rd Mar 17
The Stock Market Is a Present-Day Version of Pavlov’s Dog - 23rd Mar 17
US Budget - There’s Almost Nothing Left To Cut - 23rd Mar 17
Stock Market Upward Reversal Or Just Quick Rebound Before Another Leg Down? - 23rd Mar 17
Trends to Look Out For as a Modern-day Landlord - 23rd Mar 17
Here’s Why Interstate Health Insurance Won’t Fix Obamacare / Trumpcare - 23rd Mar 17
China’s Biggest Limitations Determine the Future of East Asia - 23rd Mar 17
This is About So Much More Than Trump and Brexit - 23rd Mar 17
Trump Stock Market Rally Over? 20% Bear Drop By Mid Summer? - 22nd Mar 17
Trump Added $3 Trillion in Wealth to Stock Market Participants - 22nd Mar 17
What's Next for the US Dollar, Gold and Stocks? - 22nd Mar 17
MSM Bond Market Full Nonsense Mode as ‘Trump Trades’ Unwind on Schedule - 22nd Mar 17
Peak Gold – Biggest Gold Story Not Being Reported - 22nd Mar 17
Return of Sovereign France, Europe’s Changing Landscape - 22nd Mar 17
Trump Stocks Bull Market Rolling Over? You Were Warned! - 22nd Mar 17
Stock Market Charts That Scream “This Is It” - Here’s What to Do - 22nd Mar 17
Raising the Minimum Wage Is a Jobs Killing Move - 22nd Mar 17
Potential Bottoming Patterns in Gold and Silver Precious Metals Stocks Complex... - 22nd Mar 17
UK Stagflation, Soaring Inflation CPI 2.3%, RPI 3.2%, Real 4.4% - 21st Mar 17
The Demise of the Gold and Silver Bull Run is Greatly Exaggerated - 21st Mar 17
USD Decline Continues, Pull SPX Down as well? - 21st Mar 17
Trump Watershed Budget - 21st Mar 17
How do Client Acquisition Offers Affect Businesses? - 21st Mar 17
Physical Metals Demand Plus Manipulation Suits Will Break Paper Market - 20th Mar 17
Stock Market Uncertainty Following Interest Rate Increase - Will Uptrend Continue? - 20th Mar 17
Precious Metals : Who’s in Charge ? - 20th Mar 17
Stock Market Correction Continues - 20th Mar 17
Why The Status Quo Is Under Increasing Attack By 'Populist People Power' - 20th Mar 17
Why the SNP WILL Destroy Scotland, Exit UK Single Market for EU - IndyRef2 - 19th Mar 17
Crypto Craziness: Bitcoin Plunges on Fork Concerns, Steem Skyrockets and Dash Surges Above $100 - 19th Mar 17
What ‘Ice-Nine’ Means for Your Money - 19th Mar 17
Stock Market 4 Year Cycle - 18th Mar 17

Market Oracle FREE Newsletter

Elliott Wave Trading

Gary Shilling Expects Great Disconnect to Cause Stock Market Crash 2013

Stock-Markets / Financial Crash Jan 28, 2013 - 06:20 PM GMT

By: DailyWealth

Stock-Markets

Steve Sjuggerud writes: Gary Shilling might have the best track record of any investor over the last 30 years...
 
If you had invested $100,000 in Shilling's "big idea" 30 years ago, it would be worth over $6 million today.
 
While most investors didn't pay attention to his big idea, Shilling was right. And he never gave up on his big idea.

Here in 2013, Shilling has some new big ideas... and some bold predictions... particularly about what he calls the "Grand Disconnect."  
 
Thirty years ago, Shilling's big idea was that inflation would go away. He made this prediction in the early 1980s, when inflation was double digits.
 
He put his money where his mouth was... and put clients into the one particular investment that would profit the most (long-dated zero-coupon U.S. Treasurys). Shilling's strategy of rolling money every year into the longest-dated Treasurys paid out 60-fold returns.
 
Stocks and gold couldn't compete at all with Shilling's strategy over that time... $100,000 invested in gold turned into $400,000, and $100,000 invested in stocks turned into $2.1 million. Shilling's recommendation beat both of those by $4 million.
 
Last week, Shilling spoke with Canada's Globe and Mail newspaper.
 
He explained his big idea today – he explained the "Grand Disconnect"...  
 
Right now we're in what I call The Grand Disconnect... The economies of the world are growing slowly... But investors couldn't care less. All they are concerned about is the money being shoveled out the door by central banks.  
 
And I call that the grand disconnect between the real economy and investors' view of the world.
 
Shilling thinks the world economy isn't really doing that well... and that you can't get sustainable prosperity and sustainably higher stock prices by printing money. He thinks the Grand Disconnect has to end badly...
 
I think sooner or later it will be eliminated by some big shock... I think it could [be this year] but forecasting big shocks like this is obviously difficult. It's in the cards, it's just a question of when it will happen.
 
So where should you invest while governments are printing money today? Shilling's answer will surprise you. He doesn't like stocks or real estate at all. And he's "agnostic" on gold.  
 
So where is he recommending you put your money? Cash.  
 
There still is some inflation in the economies of the world – but not much. So cash is not eroding due to inflation the way it was way back in the 1970s... cash is not a bad place to be.
 
Astoundingly, Shilling is not giving up on his 30-year-old big idea either. He's buying Treasurys, even though they only yield 3%. Why? He explains it: 
 
I've never, never, never bought Treasury bonds for yield. I couldn't care less what the yield is, as long as the [yields] are going down. In other words, I want the [price] appreciation... If they go down further, we will go from 3 percent to two percent... On a zero coupon bond, it'll be a total return of about 25 percent.
 
Because of Shilling, I have never bet against Treasury bonds in my near-two decades in the markets. It's been the right thing to do, every time.
 
And I think Shilling is right about the Grand Disconnect.  
 
His idea is not far from my Bernanke Asset Bubble idea. As regular readers know, Federal Reserve Chairman Ben Bernanke's zero-percent interest rate policy and enormous money printing has fueled a "bubble" that has propelled asset prices higher.
 
I agree on the Grand Disconnect – in the sense that you can't create prosperity out of printing money... and that the piper has to be paid someday.
 
But we disagree on the date that bad things start...  
 
Shilling thinks the Grand Disconnect will cause stock prices to crash in 2013. I think we have a couple more years left.  
 
Good investing, 
 
Steve 
 
P.S. You can find the full Gary Shilling interview with Canada's Globe and Mail here.

http://www.dailywealth.com

The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.

Customer Service: 1-888-261-2693 – Copyright 2013 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Daily Wealth Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife