As you can imagine I read a lot of books every year regarding personal finance & economics. I recently had the good pleasure to read Jerry Webman’s new book called Money Shift, How to Prosper from What You Can’t Control. Dr. Webman is the chief economist for OppenheimerFunds. This has been one of my favorite books this year so I wanted to share with you a couple of the highlights. I also had the opportunity to interview Dr. Webman on Sound Retirement Radio and you can listen to our interview here.
“Blame Wall Street! Blame the Fed! Blame Bush! Blame Obama! Blame Europe! Finding someone to blame is not an investment strategy,”
“Money has shifted geographically, technologically, and demographically, and we need to see how, and explore why it matters.”
“Invest for the reality of what is — not for what was or what you think ought to be.”
“The answer is that there was a financial vaccine that kept the great moderation going, and now, like an antibiotic up against a resistant strain of bacteria, that vaccine has lost its potency. The vaccine’s name? Debt. The doctor administering the vaccine? The Federal Reserve.”
“The underlying point of this book is my conviction that the kind of work I do can help you prosper from the changed world we are all living in now — as long as you first understand the change.”
“When the sailing is that smooth you can ride on just about anything that floats and get you where you want to go. But when rough seas are the result not of a passing storm but of the fundamental economic climate change, investors need to be much more careful about which ship they board.”
“Cheaper and cheaper dollars eventually mean higher and higher inflation, and eventually the bond market will respond with higher yields and lower prices.”
“Willie Sutton famously said he robbed banks because ‘that’s where the money is.’ Investing is a more honest line of work than Willie’s chosen field; it is also more secure but if you are investing because you seek to raise your standard of living and continually increase your prosperity, then, following the Sutton logic, you must go where the growth is. That is, you must invest in places, enterprises, and activities in which more more money is consistently being created and circulated, thereby providing an ever-increasing opportunity for profit.”
“More usefully, in my opinion, commodities can serve to preserve wealth and purchasing power when the economy faces significant shocks.”
“Commodities can help protect investors as prices of everything, except stocks and bonds, spiral upward. Even at times when inflation does not seem to be a clear and present danger for the United States, the risk of an inflationary surprise justifies a more or less permanent, broad-based allocation of commodities in any portfolio. If high quality bonds can provide fire insurance to your portfolio, commodities can insure against the risk that the old burglar, inflation, will stealthily steal your purchasing power.”
“What commodities can do is maintain their market value when supply or demand shocks threatened to make them scarcer, or when inflation makes everything more costly. This property of commodities means that they perform best as investments when other holdings-stocks, bonds, real estate-go into a slump. Thus their role as theft insurance: own them in case trouble intrudes, but don’t complain if they prove unnecessary.”
“The amount of your investment should be only up to the point where a loss could be disappointing, not past it to the point where it could be disastrous.”
