Contrarian indicators don't get much better than this.
Our good friend here in town, fellow Austrian economist fanatic Jonathan Lederer sent along word today that the California State Teachers’ Retirement System [CalSTRS], has approved a plan to begin investing in commodities "as a hedge against inflation and to buffer losses in equities" (Seriously, I'm not making this up - Source: Bloomberg). CalSTRS is the second largest public pension fund in the US. It's nice to see them hopping on the reflation trade 15 months into the rally - and particularly AFTER commodities placed a major top back in January.
I couldn't help shake the feeling of deja vu...hadn't we seen this before? And when I checked - yes, as a matter of fact, we have. In February of 2008 - Calpers, the California Public Employees' Retirement System (and the largest public pension fund in the US) announced its intention to increase its exposure to commodities 16-fold:
"Strength in commodity markets will be something we should see generally over the next 10 to 20 years,'' CIO Russell Read, 44, said in an interview in April, a year after he moved to Calpers from Deutsche Asset Management. "The actual importance of the energy and materials sector we believe is going to explode.''
Sounds like a pretty astute call from Read - how'd it work out?
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ContraryInvesting.com
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