The great debate in investment circles continues to be the inflation story. We’ve seen huge hedge funds moving into reflation trades (Paulson) while others are still rumored to be playing the deflation card (Hayman Advisor and Bridgwater are notable). A key component to the inflation trade will clearly be raw material prices – the most influential of which is oil. I’ve attached a great chart detailing potential CPI scenarios based on oil prices:
Click for larger image
Chart courtesy of JP Morgan.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
tdog
Best I can tell, the funds you mention have some positions betting on deflation and others on inflation. Paulson’s even said his gold position is a hedge.