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I think one, me anyway, needs to have some capital sitting at .25%, sitting awaiting for grand opportunities in select insurance companies.

Comments, please, other views, ideas re this topic?

I agree completely, except I don’t know if I am necessarily holding my capital at .25% waiting for opportunities in insurance companies. I don’t know what companies will be the most attractive at that point.

I just can’t get away from the idea that interest rates must go up – at some point. I don’t know when or what will trigger it, but does anyone believe that these low rates are a permanent fixture?

Currently the Fed is financing a huge portion of the federal government’s borrowing. Can that go on forever? I can get real stubborn with this, but I just don’t see how we can continue to print money without consequences.

There was a post earlier on this board about hyperinflation. It does not need to be hyperinflation to be ruinous. Just 10% a year will do quite nicely.

I can also be real stubborn in thinking that we are in bubble territory in many assets. Certainly bonds. Probably farmland. Probably stocks. At some point prices get so high that people are going to decide that they are not receiving enough reward potential for the risk they are assuming.

Munger once described the two types of assets. One type are assets that deprive their value based upon their underlying economic utility. This would include stocks, bonds, real estate – things like that. Another type of assets are basically collectibles such as rare coins, rare stamps, art, and vintage automobiles. Their market value is based upon the expected price someone else will pay for them.

The Fed’s money printing press is distorting the market pricing on the first group of assets. They are being priced less on their underlying economic prospects ( is the economic value of a 30 year Treasury really 3 percent? ) and more and more like the assets in the second group. When economic assets are being priced not on their economics but on what someone else may pay for them it is called Greater Fool Investing.

So, yes, hold on to that .25% return and lose purchasing power every day. Many people like to think of themselves as contrarians. The most contrary position today is cash.
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