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Thursday, November 11, 2010

Bubble Bubble....?



LA Times page 1 Nov 9

Rumblings of inflation grow louder

Commodity prices are rising — driven by higher consumption, bad weather and investor demand — and Americans are starting to feel it in their pocketbooks.


Commodity Prices Surge

Gold, Cotton Touch New Highs as Fed Stimulus, Chinese Growth Drive Demand

BoA Merrill Lynch launches UCITS-qualifying commodities funds

4 Nov 2010
Bank of America Merrill Lynch is launching it Commodity Alpha & Beta family of UCITS III funds, namely the MLCX Commodity Enhanced Beta Fund; the MLCX Agriculture Optimal Crop Fund; and the MLCX Commodity Alpha Fund.

DFA Plans to Roll Out a Commodity Fund

Investor demand trumps DFA's skepticism about commodities as diversifier and inflation hedge

Article |

Dimensional Fund Advisors (DFA) is expected to roll out the DFA Commodity Strategy by year-end, according to a report by Morningstar Advisor on Monday, August 23. Morningstar noted that DFA had registered with the Securities and Exchange to launch the new product on August 16....
Morningstar suggested that in offering the new fund, DFA acceded to the wishes of its large clients. But it had to put aside its skepticism about the long-term usefulness of commodities as a portfolio diversifier and inflation hedge. DFA, Morningstar said, bases most of its fund offerings on academic research demonstrating that small-cap value stocks tend to outperform over the long term.

Kenneth French on the DFA website:

KRF: No, my views have not changed—at least on this topic. Here's the thrust of my 2004 presentation....As a result, investors who use commodity funds to hedge inflation almost certainly increase the risk of their portfolios. Six years after my presentation, I still think these points are correct. Commodity funds are probably a good investment for some investors, but not for the reasons many of their advocates suggest.

glenn beck,com: (transcript form november 9: radio program 10 million listerners

GLENN: No, no. I will tell you this. We have had our financial advisors, the guys who are stat-related guys, they are not politicians. They are more like the David Walkers of the world, you know, that they're just, all they do is look at stats. All they do is look at stats. And all of them are saying around the corner. All of them are saying starting in January you're going to see real price inflation. One of our experts, and I don't name them because they advise us off the air. They're not, they're just -- you know, quite honestly I think many of them don't want to be associated with me because they don't want all the trouble associated..., an This is what they do for a living. And one of them said by next year a quarter of this nation will not be able to afford food. A quarter of the nation will not be able to afford food. I have to tell you, I'm never, ever right on timing. I have -- I'm not giving you my projection of timing. I'm telling you that there are these experts that say this. Is this true? I have no idea. I will tell you that historically speaking printing money leads to unbelievable inflation and gigantic interest rates. That's what happens. Period. So is it going to happen? At some point, yes. When? I don't know. I just ask you to please prepare.

Now, people have been writing me and saying, Glenn, what do we do? How do we prepare? ... And if you can save money and buy extra food and put it on the shelf, do so. If you can spend the extra money on having some food storage, if you are somebody who, you know, you've got grandkids now and you can't get the kids to listen to you and you have some extra money, buy it and put it on the shelf for them. ...

Experts are now telling me that it's happening next year. I don't know. I just know that prices of commodities have gone through the roof. I know that when I started telling you about gold, it was $700. When they were making fun of me and telling me that I was going to destroy people's lives because they were all going to go broke and you were just a hapless dupe when you were buying it at $1100 an ounce, today it is over $1400 an ounce. Could be worth $300 tomorrow. I don't know. But please look at the direction of --

PAT: I like how you say that, though, for the reverse psychology element. You tell them that so they will go ahead and buy it...

GLENN: Shhh.

PAT: And then when it does drop --

GLENN: Shhh.

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