Bill Bernstein: We're starting to see all of the signs of a Bubble

Intressant avsnitt på Morningstar’s Long View pod med William Bernstein som är författare och marknadshistoriker.

Inget att agera på som vanligt, i övrigt är det ett bra avsnitt där även inflation, hyperinflation, råvaror och guld diskuteras.

Benz: Let’s switch over to discuss investing, starting with the current market environment. You just published a book on popular delusions. Does that describe this market in your opinion? Are we in a bubble?

Bernstein: Well, a year ago, I would have answered that in the negative. I just didn’t see any of the usual diagnostic signs that one sees during a bubble, which is people thinking that they’re going to be coming effortlessly rich, which they chatter about endlessly whenever you go to a party or you meet people casually on a social basis. We weren’t seeing people quitting their jobs to day trade. You weren’t getting a lot of anger or pushback when you express skepticism, and you weren’t seeing extreme predictions. But we’re starting to see all of those things now. And particularly, with Robinhood and GameStop and the other short squeezes that are going on, there’s now a significant population of relatively young people who really believe that this is the path to effortless wealth, and they’ve already made it to easy street, and they’re quite excited about it. And I have to admit that I missed this for a while because I don’t hang around a lot with too many 30- to 40-year-old people aside from my kids who are too smart to get involved in this sort of thing.

Hur skyddar man sig mot inflation? Bernstein har tydliga åsikter om guld. :slight_smile:

Ptak: And so, if they are worried about that, and they wanted to build some protection into the portfolio, let’s say, to hedge against inflation risk, how would you advise they go about that? I mean, TIPS are an obvious option. Are there other things that they should be mindful of?

Bernstein: Well, there are very few things that can actually protect greatly against inflation in the short term. The very best thing in terms of fixed income is, of course, T-bills, since you can roll those over very quickly with high frequency and there’s no duration risk there. In the very long term, stocks are certainly a good hedge against inflation, because they are a claim on real assets. And if you really want to tilt to an anti-inflationary stock portfolio, you should go heavily into commodities stocks or commodities-producing companies. And I don’t think there’s anything wrong with doing that.

The one thing that is definitely not a hedge against inflation is gold. Because when you look around the world and you look at how gold has done in various countries during periods of inflation, it doesn’t do well. In fact, gold does very well in periods of deflation, because deflation is associated with financial crises and banking crises. And so, when people stop trusting money, they stop trusting gold. But inflation generally doesn’t do good things for the real value of gold. It happened to have done that to the U.S. in the late 1970s. But almost everywhere else in the world, if you look, it doesn’t really work.

Man har inte räntor i portföljen för avkastningen!

Benz: Well, speaking of investments that might confer some diversification, fixed-income, high-quality government bonds have long been the ballasts that investors rely on for their equity exposure. With yields as low as they are today, do you think bonds are going to be good diversifiers going forward, given those ultralow yields, the fact that investors have less of a cushion?

Bernstein: You invest in fixed income not for the return on your capital, but the return of your capital. If you have a Treasury bill that yields close to zero, in the long term, it still may be the highest-yielding asset, the highest-returning asset in your portfolio, because it is the asset that allows you to sleep at night and stay the course. And that’s the real purpose. You’re not looking for yield; you’re looking for safety. And that’s what those things provide. Fairly frequently in a Berkshire Hathaway annual report you’ll read Charlie and Warren discoursing about all the bad things about Treasury bills, about all the disadvantage they have, not the least of which lately is they’re near zero yield. And then, the final sentence in that paragraph usually is something like, “Nonetheless, Berkshire will continue to invest the large bulk of its liquid reserves in Treasury bills.”

Lite roligt citat nedan gällande “free” trading :joy:

Bernstein: I couldn’t agree with you more. I don’t have anything to add to that. The worst thing you can do to an uninformed investor–him or her—give the tools to trade freely. What we’ve done with frictionless trading is we’ve given chainsaws to toddlers.

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