Disagreeing with Forbes on macro outlook

Interesting that I find myself disagreeing with forbes publisher rich karlgaard on almost everyone of his new investment/portfolio ideas (may 5, forbes, p.29).

He lays out defensive actions people can take if housing prices drop further (which I’m generally in agreement on). These ideas may be from a fellow forbes writer, gary shilling. Wasn’t totally clear. Either way I’m baffled.

Overall, I disagree with the americentric view that any recession will hit the rest of world worse.

* he says short commodities, I say go long. Based on his belief that worldwide demand will fall. I think that worldwide demand will keep rising as developing countries like china and india increase stds of living and experience growing demand for key economic inputs like oil and steel. Commodities should also gain as the dollar continues to fall.

* he says short emerging mkts while I’m neutral. I believe they will outperform us but may not deliver much as worldwide growth slows.

* he says buy US dollar, while I say sell. With the fed lowering interest rates and general demand for US assets declining I don’t see what could prop the dollar up. My only question is how fast it declines as it will be buffetted by problems in other economies too. Should decline most drastically against china (if the govt allows) and other asian currencies, also against all countries with large oil exports like brazil, sweden, arab countries and possibly mexico.

* he says sell US stocks. Agree completely, with exception of oil and oil rig leasing cos.

* he says sell your house fast. Agree!

* says sell commercial real estate. I’m neutral. Rents could go up with inflation while amounts owed on mortgages are fixed.

* he says buy long treasury bonds which I disagree with. Seems that US rates will have to go up at some point in order to attract capital, esp once expected annual dollar declines get factored in.

Will be fun to see how this plays out. Wish I had the time and hedge fund to act on my macro beliefs:) Sent wirelessly via BlackBerry from T-Mobile.

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