Can We Profit in a Stagflationary Environment?

Kevin Duffy and John Rubino return as guests in this week’s program and talk about what happens  to the economy when it dips into a recession.

Most investors make money in bull markets and lose most of it in bear markets. An exception is Kevin Duffy whose Bearing fund registered triple-digit gains in the 2008 financial crisis. His Austrian school economic perspective paved the way for those stellar 2008-09 bear market profits. But that same perspective did not equip him to excel when policy makers inflated financial markets. He has since developed a strategy for making money in bull, bear or stagflationary markets. Kevin shares his views of the current tumultuous markets as well as some of his current investment ideas published in his Coffee Can Portfolio newsletter.

John joins me to discuss his sense of the current markets and share his views on how he thinks investors should plan for what is increasingly looking like a stagflation environment that may in fact be one of much greater magnitude than that of the 1970s. Your host passes along some of his investment ideas in his monologue.   

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Kevin Duffy is principal of Bearing Asset Management which he co-founded in 2002. The firm manages the Bearing Core Fund, a contrarian, macro-themed hedge fund with a flexible mandate.

Bearing gained notoriety during the Great Financial Crisis by betting against stocks like New Century Financial, Fannie Mae, Bear Stearns and Lehman Brothers. Duffy wrote extensively on the housing and credit bubble identifying root causes of the bubble. A month later, he issued a warning in an op-ed for Barron’s titled “For Whom Do the Bells Toll.” The Bearing Credit Bubble Index was cited by Marc Faber in speeches and The Gloom, Boom & Doom Report.

Prior to Bearing, Duffy co-founded Lighthouse Capital Management and served as Director of Research from 1988 to 1999. He chronicled the excesses of the Japan and technology bubbles of the late 1980s and late 1990s respectively. The firm was later sold to Fisher Investments.

Duffy also publishes a bi-monthly investment letter called The Coffee Can Portfolio.

John Rubino is the founder of the popular financial website DollarCollapse.com. He is co-author, with GoldMoney’s James Turk, of The Money Bubble: What To Do Before It Pops, and author of Clean Money: Picking Winners in the Green-Tech Boom (Wiley, 2008), The Collapse of the Dollar (also with James Turk), How to Profit from the Coming Real Estate Bust (Rodale, 2003) and Main Street, Not Wall Street(Morrow, 1998). After earning a Finance MBA from New York University, he spent the 1980s on Wall Street, as a Eurodollar trader, equity analyst and junk bond analyst. During the 1990s he was a featured columnist with TheStreet.com and a frequent contributor to Individual Investor, Online Investor, and Consumers Digest, among many other publications.

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.