Friday, March 9, 2012

After consulting with your own trusted advisors

No one really knows how the end of this financial crisis will play out other than “badly.” Many have offered their opinions. They should be respected for their bravery and presumptiousness. Only the passage of time will determine who was correct.
Many readers have asked my opinion. As most of you know, I think the dollar will deteriorate in value, probably precipitously. Most of my financial posts have alluded to that or even specifically forecasted it as the means to hyperinflation. Obviously, no one knows for sure what will happen. Yet we all should develop expectations and adjust our portfolios and decisions toward these. You must develop your own rather than uses someone else’s.
There are plenty of knowledgeable analysts that believe (or believed, I think there are fewer these days) that deflation rather than inflation or hyperinflation is how this ends. They may be correct. Or neither extreme might be right. You must utilize whatever resources you have to develop your best judgment and then execute toward that ending, always remaining flexible enough to adjust your strategy should your expectations cease to be plausible.
One scenario is presented by Toby Connor in his article entitled End Game. His thinking is consistent with mine regarding where we are headed, although I don’t understand his anticipated dollar rally after a near collapse. When he speaks of the dollar, he is speaking mostly with respect to other currencies. This common practice can be misleading because all fiat currencies are depreciating, and most at accelerating rates. Thus, it is possible for the dollar to be weakening and appear strong on a relative basis only because the other currencies are depreciating at a faster rate.
I do not know Mr. Connor nor am I aware that I have ever read anything before by him. I thought the article might provide one perspective to investors.
Follow his, or anyone else’s advice, at your own risk and after consulting with your own trusted advisors.

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