A tale of two inflations
November 2009
The inflation/deflation debate is all about timing
A Tale of Two Inflations summarises investment manager David Miller’s thoughts on inflation, and the current debate between strategists and economists on this lynchpin of investment planning.
He observes that investors are benefiting from 'high inflation' of the assets they own and 'low inflation' of what they consume, and suggests:
- Inflationary pressures are likely to remain low although in the UK we will need to monitor currencies particularly closely.
- Asset prices are benefiting from the extra liquidity provided by governments.
- Some companies are coping better than others and so good stock selection will drive investment performance.
For charity investors this means that a combination of portfolio construction, stock selection and liquidity will be required to benefit from these conditions and also allow for occasional changes of tack.
Author: David Miller
David Miller joined Cheviot Asset Management in 2007 as partner to lead the alternative investments team having previously held roles at Royal Bank of Canada and JP Morgan. Prior to that he was director and head of charities at Robert Fleming.
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