Every year, we update some of our core articles.
Every year, we update some of the core articles in our Best of Merriman library.
In this update to one of the most important items in our article library, Merriman shows how a series of simple but powerful concepts can benefit patient, thoughtful investors. This 2013 revision updates our hypothetical examples with data through 2012.
I am a buy and hold investor, but two recent lectures by Niall Ferguson, a Harvard Economic-Historian, make a strong case for the impending economic collapse of the United States. He predicts default and/or rampant inflation and suggests re-allocating one’s portfolio to a mixture of gold and foreign investments. I can already hear you saying “no, this time won’t be different, America will recover”, but I suppose I just wanted to hear it straight from the source. Any words of wisdom would be most appreciated.
At any given time, it is not difficult to find somebody professing to know the short term future of the economy or the capital markets. Quite often these people are highly regarded professionals armed with plenty of data to support their claims. And quite often they are wrong. History is replete with examples of how investors made wholesale changes in their portfolios based on excessively optimistic or pessimistic predictions, only to regret it deeply after the opposite occurred.
We believe that the future is fundamentally unknowable, and thus cannot be predicted with any precision. We believe investors could use their time and energy and brainpower much more effectively by controlling what they can control instead of trying to predict what cannot be predicted. We do this for our clients and with our clients by maintaining portfolios that are designed to address a wide range of economic and market climates, including inflation.