"You will be a better investor having read this book. . . I cannot recommend it (the book) strongly enough."
—Dennis Gartman, from the Foreword, The Gartman Letter
". . . brilliantly exposes the delusions of the bullish consensus . . . one of the sharpest thinkers on economic issues and their market implications. This is a must-read book for all."
—Nouriel Roubini,Professor of Economics
"Gary Shilling is rarer than a black swan; he's an economist who foresaw deflation. Shilling has predicted the ‘ impossible' several times in his career, so his colleagues should no longer be surprised when he turns out right."
—Robert R. Prechter Jr.,Author of Conquer the Crash
"Ignore Gary at the peril of your investment portfolio. Let him show you alternatives that will work in a world of deleveraging, deflation, and slower growth."
—John Mauldin, President, Millennium Wave Advisors
"The acid test of advice: those who followed Gary's not-always-popular advice during these turbulent times made money. This man is an original-and well worth listening to."
— Steve Forbes,President, CEO, and Editor-in-Chief, Forbes magazine
Top economist Gary Shilling shows you how to prosper in the slow-growing and deflationary times that lie ahead.
While many investors fear a rapid rise in inflation, author Gary Shilling, an award-winning economic forecaster, argues that the global economy is going through a long period of de-leveraging and weak growth, which makes deflation far more likely and a far greater threat to investors than inflation. Shilling explains in clear language and compelling logic why the U.S. and world economy will struggle for several more years and what investors can do to protect and grow their wealth in the difficult times ahead. The investment strategies that worked for last 25 years will not work in the next 10 years. Shilling advises readers to avoid broad exposure to stocks, real estate, and commodities and to focus on high-quality bonds, high-dividend stocks, and consumer staple and food stocks. .
Filled with in-depth insights and practical advice, this timely guide 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 you can do to prosper in the difficult times ahead.
Q&A with Author A. Gary Shilling
Author A. Gary Shilling |
Meanwhile, American consumers have no choice but to save more and repay debt. After earlier home equity withdrawals and the collapse in house prices, few have any equity left in their houses and a quarter of those with mortgages are under water. With the stock nosedives in 2000-2002 and 2007-2009, few individual investors trust their equity portfolios to finance their kids’ educations and their own early retirements. The postwar babies desperately need to save for retirement, and many can. Many are in their peak earning 50s and their offspring’s college tuition payments are completed. Also, continuing high unemployment is encouraging saving for contingencies.
The deleveraging of the global financial and U.S. consumer sectors as well as seven other forces detailed in my book portend slow global economic growth in the next decade.
You see deflation as more likely than inflation. What would you say to investors who are worried that so-called QE II will ignite inflation in the years ahead?Massive fiscal and monetary stimuli have done little to promote economic growth or deflect deflation. The $814 billion 2009 fiscal stimulus program didn’t slash the unemployment rate to 7.0% in late 2010, as Obama’s economists predicted in January 2009. Instead, it reached 9.8% in November 2010 and consumers saved over half the resulting rise in after-tax income. With QE I, the Fed created $1 trillion in excess reserves that the banks don’t want to lend and creditworthy borrowers don’t want to borrow. So those reserves didn’t turn into money. QE II will simply add $600 billion to that excess pile. And if lenders and borrowers are energized to do business, it will take three or four years for robust global growth to use up excess capacity and threaten inflation. That will give the Fed plenty of time to extinguish surplus reserves, as Chairman Bernanke said they would in his December 5 “60 Minutes” interview.
What are the risks that the long period of deleveraging and slow growth could lead to protectionism or other counter-productive policy responses that potentially could contribute to another protracted recession?Rising protectionism is one of nine forces leading to slow global growth in the next decade, as discussed in my book. Furthermore, protectionism and persistent financial woes threaten to turn chronic slow global growth into a worldwide depression.
What is the outlook for Europe? Will the eurozone remain intact?The threat to the U.S. and other non-European major countries is not so much the high probability of renewed recession on the Continent. Instead, as detailed in my book, it’s the global intertwining of banks and other financial institutions that will spread unfolding European troubles worldwide.
In The Age of Deleveraging, you discuss 10 investment areas you favor. What do they include?I’ve never, never, never bought Treasury bonds for their yield, but only for appreciation, the same reason most people buy stocks. If the 30-year bond yield drops to 3% due to the slow economic growth and deflation I foresee, the gain in price will be 27% plus interest coupons, and 51% appreciation on a 30 -year zero coupon Treasury bond.
Another of my 10 buy suggestions is equities with high, consistent and increasing dividends. With slow growth in the economy, corporate profits will rise modestly in the years ahead. So dividends will likely constitute the majority of the total return on stocks.
In your new book, you also discuss 12 investment areas to sell or avoid. Which ones?I’d also avoid conventional homebuilders and related companies. There are at least 2.5 million excess housing units in inventory over and above normal working levels, and more to come as foreclosures proceed. That’s a lot considering the long run annual construction rate of 1.5 million units. The crushing inventory burden will probably push median single-family house prices down another 20%. At that point, 40% of homeowners with mortgages will be under water, owning more than their houses are worth, up from 23% now. That will encourage many more to abandon their abodes, resulting in many more foreclosure sales.
"synopsis" may belong to another edition of this title.
Praise for The Age of Deleveraging
"Gary Shilling brilliantly exposes the delusions of the bullish consensus and the deadly dangers of debt accumulation, deflation, deleveraging, debt defaults, and double-dip and near-depression risks. He is one of the sharpest thinkers on economic issues and their market implications. This is a must-read book for all."
—Nouriel Roubini, Professor of Economics and International Business, Stern School of Business, New York University
"Watch as the world Gary paints in this book comes to pass. And it is a very different world than the usual suspects want you to see. Ignore Gary at the peril of your investment portfolio. So instead of buying their funds, why not read Gary and let him show you alternatives that will work in a world of deleveraging, deflation, and slower growth."
—John Mauldin, President, Millennium Wave Advisors, LLC (MWA), a three-time N.Y. Times bestselling author, and editor of Thoughts from the Frontline e-letter
"Gary Shilling is rarer than a black swan; he's an economist who foresaw deflation. While central bankers were promising endless prosperity through managed inflation and influential economists were celebrating the 'New Economy,' Gary's followers were holding treasury bonds and preparing for the big shift. Shilling has predicted the 'impossible' several times in his career, so his colleagues should no longer be surprised when he turns out to be right."
—Robert R. Prechter Jr., author of Conquer the Crash
"This highly readable book, written by an accomplished economist, is certainly worth your attention. I have known Gary since 1973 and have always been impressed by his ability to recognize long-term trends. The Age of Deleveraging is the book you should definitely read."
—Dr. Marc Faber, Marc Faber Limited
"Lots of unconventional insights of analyses. But remember the acid test of advice: those who followed Gary's not-always-popular advice during these turbulent times made money. This man is an original—and well worth listening to."
—Steve Forbes, President and Chief Executive Officer, Forbes, and Editor in Chief, Forbes magazine
While many investors fear a rapid rise in inflation, author A. Gary Shilling, an award-winning economic forecaster, argues 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.
In The Age of Deleveraging, Shilling 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.
Opening with an informative look at Shilling's incredible forecasting track record—including the recent housing and financial bubbles—as well as his philosophy behind forecasting and analyzing the economy and financial markets, The Age of Deleveraging moves on to discuss his outlook for slow growth and deflation in the next decade, and how you can cope with it.
The fact is, investment strategies that have worked for the last twenty-five years will not work in the next ten. Nobody understands this better than Shilling, and with The Age of Deleveraging, he 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.
Along the way, Shilling also:
Filled with in-depth insights and detailed advice, this timely guide 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 you can do to prosper during this time.
"About this title" may belong to another edition of this title.
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