Reader, if you haven’t noticed, this blog attempts to look at the world of personal finance through a new set of eyes. When I go dumpster diving for articles worth my commentary, I’m looking for the diamonds in the rough (or twinkies in the garbage) that convey unspoken themes.
Morningstar used to be just a fund rating system. In recent years they’ve expanded into a media company, most notably employing a staff of writers. That’s fine and all, as many of the writers are industry veterans. Karen Dolan, a CFA and Morningstar writer, tapped her resources to compile the opinions of a few mutual fund managers. She wanted to get their input on what she calls “Your Pocketbook’s Biggest Enemy”. Rightly so, as she’s talking about inflation. Here’s what the managers said:
- Bob Rodriguez, founder of FPA Capital thinks inflation is going to be high and remain that way for the long term. Pessimist to say the least.
- Bill Gross of PIMCO (no, not PimpCo) believes we are looking at stagflation. That is, we’ll experience inflation with slowing growth.
- Tom Marsico of Marisico Capital Management cites high commodity prices (like oil) as the main cause for immediate inflation. People pay him to think of this???? Joe Idiot America knows that. But Tom is an expert on the subject and his fund’s holdings indicate he’s not worried about long term inflation.
- Bill Miller, longtime manager of Legg Mason Value opined commodity prices are in a big bubble. He can’t say when the bubble will pop, but he expects it to go on for a little while longer.
Whilst inflation is a subject of interest here, my point is the analyst’s outlooks. Each of 4 experts (all equally likely to be interviewed on CNBC or some other business medium) have differing opinions on inflation. Not only differing, but B-Rod and B-Mill are close to polar opposites.
What can we learn from this? Experts, including The Weakonomist, don’t know what will happen (yeah right). They can only guess. Someone in this group is going to be dead wrong, its possible they’ll all be off.
Perhaps the author says it best:
The differences in opinion may be somewhat reflective of the different lenses with which these managers view the world.
Keep this in mind next time an expert comes on TV to tell you what is going to happen.
 By The Weakonomist |
The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics. Also keep in mind that nothing I say can be construed as financial advice. |
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