During the better part of the last 18 months, since the financial crisis erupted, the debate over whether we are in store for inflation or deflation has dominated the investment decision making thoughts of all market participants, from retail investors to hedge fund managers.
The burning question – "Are we heading for inflation or deflation?" – is the toughest one to hurdle. Since there is no way of knowing, you have to make a decision based on what you know about each, then, make a decision about how to invest, based on your decision. Its precarious at best. Many investors, however, unable to settle on an outlook, will choose the option that requires the least amount of thought – cash, GICs, and short term bonds – and wait for things to be clarified.
That's why something hedge fund manager David Einhorn, of Greenlight Capital wrote last year has got my attention again.
Pierre Daillie (AdvisorAnalyst.com), GlobeAdvisor.com, February 1, 2010.
http://www.globeadvisor.com/advisoranalyst/aa20100201.html
