Gary Shilling on How to Invest in the Age of Deleveraging and Deflation, Part II

http://www.minyanville.com/ Dr. Gary Shilling continues his talk with Minyanville's Josh Lipton on how to invest in the stock market

during a period of slow economic growth and deflation.

While many investors fear a rapid rise in inflation, Shilling, an award-winning economic
forecaster, tells Lipton that the global economy is going through a long period of deleveraging
and weak growth -- which makes deflation far more likely and a far greater threat to investors
than inflation.

Shilling, the author of The Age of Deleveraging: Investment Strategies for a Decade of Slow
Growth and Deflation, explains in clear terms why the United States and world economy will
struggle for several more years and what you can do to protect and grow your wealth in the
difficult times ahead.

You can read part 1 of Lipton's interview with Shilling at http://www.minyanville.com/
businessmarkets/articles/gary-shilling-shilling-deleveraging-deflation-josh/11/1­5/2010/id/31129
and you can read part 2 at http://www.minyanville.com/businessmarkets/articles/gary-shilling-a-
shilling-deleveraging-deflation/11/15/2010/id/31130 .

Lipton is a Staff Writer at Minyanville, covering Business and The Markets. Before joining
Minyanville, Lipton most recently was a staff writer at Forbes.com, where he covered stock
market activity and trends. Prior to that, he was an Assistant Editor at The American Lawyer. His
articles have also appeared in Rolling Stone magazine, New York magazine, and The Wall Street
Journal, among other publications.

Lipton opens with an informative look at Shilling's incredible forecasting track record --
including the recent housing and financial bubbles -- as well as the economist's philosophy
behind forecasting and analyzing the economy and financial markets. Then, he moves on to
ask Shilling to discuss his outlook for slow growth and deflation in the next decade, and how
investors can cope with it.

According to Shilling, investment strategies that have worked for the last 25 years will not work
in the next 10. He then offers expert advice on what it will take for investors to navigate such
treacherous terrain, including avoiding commercial real estate and commodities and focusing on
high-quality bonds, consumer staple and food stocks, and investments related to North American
energy sources.

During the interview, Shilling also examines the effects of increased government regulation and
involvement in the economy as well as six other factors that will hamper economic growth in the
next decade; outlines various strategies for investing in appropriate sectors and avoiding others;
and provides a practical perspective of how stocks will fare in the long run.

Filled with in-depth insights and detailed advice, this timely interview lays out a convincing
case for why investors need to be prepared for a long period of weak growth and deflation -- not
inflation -- and what investors can do to prosper during this time.

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Category:

Entertainment

Tags:

• gary shilling
• how to invest
• deleveraging
• deflation
• investment strategies
• minyanville
• Josh Lipton
• The Age of Deleveraging
• stocks
• stock market
• economy
• Business
• gold
• China
• Dollar
• Euro
• value of the Dollar
• value of the Euro

[lucas822]

Is someone vacuuming @ 9:17?

[Minyanville]

@lucas822 yes, actually that would be one of the building custodians in the hallway.  Haha, never thought someone would notice that.

[4295eye]

@misterman6000 Unless we switch to a gold standard. If thats a very big if, the FED is printing paper not value but that doesn't take much brain work. Why are the chinese buying up our gold silver and land? Equity they need something to back our green paper bills. Where is milton friedman to put these idiots in there place.

[misterman6000]

Deflation , I wish we can have some; but it is not coming. Deflation implies an increasing value of the dollar. With deflation it is important to look at the country that is experiencing the deflation; in a country as overleverage as the US deflation spells Bankruptcy. The dollar is a paper note of a defaulting issuer. Its value will fall there is no stopping it.

[144jr144]

@2100v he said 2% deflation and 3% dividends. I presume that you may not be familiar with the phenomenon of currencies rising in purchasing power, such as when debts default (AKA de-leveraging) and people stop discounting cash with unexamined projections that credit will be more and more easily availabkle the further into the future we go.

[144jr144]

Shilling seems like a pretty astute fellow. His lack of emphasis of the specific technology of oil and cheap energy is notable to me though. As technology has sped us to the exhaustion of cheaply available oil, gasoline prices and budgets worldwide have led the various other ripple effects of destabilizing and deflating markets. Check out TheDominOILeffect d o t  com

[2100v]

"Commodities are increasing because of a weak dollar." At least he got that one right. How does he think it will ever get strong again with all the US debt and 7 T held by foreign banks? If you want a sure bet, the dollar lost 97% of it's value since the creation of the FED. Do you think it will continue down another 97% in the next 10 years. I bet when I need to sell my gold and silver in 20 years, I will be able to buy more with it than the same dollars would today.

[2100v]

Say what? if the stock dividend is 3% and inflation is 2% that is a 5% real yield??? In my layman, non economic's Phd brain, it looks like a real 1% yield to me.

[fuckoff187]

lol 30 year bonds...ask pimco

[optionsupdate]

@marcinbarto check out his record