Comments on: Afraid of QE3? Buy Real Assets http://blog.alliancebernstein.com/index.php/2012/09/13/afraid-of-qe3-buy-real-assets/?utm_source=rss&utm_medium=rss&utm_campaign=afraid-of-qe3-buy-real-assets The AllianceBernstein Blog on Investing Thu, 23 May 2013 20:08:24 +0000 hourly 1 http://wordpress.org/?v=3.4.1 By: Thomas Rekdal http://blog.alliancebernstein.com/index.php/2012/09/13/afraid-of-qe3-buy-real-assets/#comment-16916 Thomas Rekdal Fri, 14 Sep 2012 01:06:58 +0000 http://blog.alliancebernstein.com/?p=2676#comment-16916 This is good, but too easy. Yes, I get it that if the Fed makes a mistake and we get a burst of inflation, real assets is the place to be. I am inclined to think that two other scenarios are much more likely (but I have no idea what probability to attach to either): Alternative possibility one: We get gradual, but persistent deflation produced by an aging population (less willing to spend) and a broke population (unable to spend). Alternative possibility two: We get an endless policy stalemate produced by an inability of policymakers to reach any agreement, and a Federal Reserve prepared to do whatever it takes to avoid depression. What assets should I hold if either possibility turns out to be the case? What assets should I hold if I weight the probablity of each outcome to be equal? This is good, but too easy. Yes, I get it that if the Fed makes a mistake and we get a burst of inflation, real assets is the place to be.

I am inclined to think that two other scenarios are much more likely (but I have no idea what probability to attach to either):

Alternative possibility one: We get gradual, but persistent deflation produced by an aging population (less willing to spend) and a broke population (unable to spend).

Alternative possibility two: We get an endless policy stalemate produced by an inability of policymakers to reach any agreement, and a Federal Reserve prepared to do whatever it takes to avoid depression.

What assets should I hold if either possibility turns out to be the case? What assets should I hold if I weight the probablity of each outcome to be equal?

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