Deflation: Strategies for Building Wealth in the Coming Wave of Deflation (Hardcover)

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Editorial Reviews

Amazon.com Review

Most people associate deflation with the 1930s: depression, unemployment, and a spectacular stock market crash. But A. Gary Shilling doesn't think that deflation is all that bad--in fact, he says, if you're prepared, deflation can be a good thing. In Deflation, Shilling outlines why he thinks we're about to enter a prolonged period of deflation and offers advice for businesses and investors on how best to position themselves and their finances and cope with the specter of falling prices.

Shilling sees several forces feeding the trend toward deflation, including the end of the cold war, reduced government spending, growing surpluses, the widespread adoption of technology, the emergence of the Internet, deregulation, and the recent Asian contagion. He also believes that the stock market is due for a severe correction that "would destroy enough individual wealth to chase consumers out of spending and into a saving spree," thereby slowing demand for goods and services and encouraging deflation even more.

Among the investments that Shilling recommends for deflationary times are treasury coupons and zero-coupon bonds, utilities, and U.S. stocks (after the correction, of course). Given Alan Greenspan's maniacal focus on fighting inflation, it might be difficult to swallow Shilling's deflationary forecast. Nevertheless, Shilling has done his homework, and it shows: he builds a case that's both convincing and easy to read. No one knows for sure what our economic future holds, but any open-minded investor would be prudent to hear Shilling out. --Harry C. Edwards

Product Description

Were you to have followed Shilling's advice in the early 1980s, you would have been a full participant in the 15-year bull market in both bonds and stocks that ensued... his analysis, as usual, deserves careful consideration.-- Bruce J. McCowan, Former Chairman, McCowan Associates, Inc. In the early 1980s, Shilling was one of the first to raise the possibility of disinflation … At the time, he was considered extreme, but that's just what happened. Now he's considered extreme once again. We'll see--Terry Savage, Personal Finance Columnist, CHICAGO SUN-TIMES. Were you to have followed Shilling's advice in the early 1980s, you would have been a full participant in the 15-year bull market in both bonds and stocks that ensued...his analysis, as usual, deserves careful consideration.--Bruce J. McCowan, Former Chairman, McCowan Associates, Inc. Remember the days of inflation? The days of double-digit price increases, inflation-fighting sales at the local market, buying today before prices increased tomorrow? The era of inflation is over, says, A. Gary Shilling. He should know. He was among the first to predict the demise of inflation 20 years ago. Now he says the economy is entering a period of deflation, with chronic and widespread declines in prices that will affect people's investments, their businesses, and their personal affairs. And he shows investors how to craft a portfolio that will shield their capital from loss as it continues to increase their wealth in deflationary times. Dr. Shilling is the influential forecaster and Forbes columnist consistently ranked among the leaders by The Wall Street Journal, and twice voted Wall Street's top economist in Institutional Investor's poll of financial institutions. In Deflation, he sounds a clarion call for forward-thinking investors everywhere. A number of factors--including the end of the Cold War, the increasing popularity of the Internet, the new era of government surpluses, and increased competition, deregulation, and free-market economies worldwide--are joining to usher in a new, and unfamiliar, era of deflation after more than six decades of inflation. Shilling tells why the coming inflationary era will be a positive development, spurred mainly by the rapid development of new technologies and increasing supplies of almost everything. And he shows readers how to navigate their way through a rough transition period that will be sparked by a significant decline in today's overpriced stock market. Investors, businesspeople, and individuals will all profit from Dr. Shilling's exhaustive research and lively, easy-to-understand writing style. For those looking to survive--and thrive--in the coming wave of inflation, this book will be an essential guide, providing specific investment and business guidelines, including: An 18-point investment strategy for creating your own bull market--during both the transition to deflation and the deflationary era itself; How to steer clear of the Asian Contagion and which global hotspots are most likely to be infected; Why bonds will outperform the stock markets--and which bonds should be strongest! Long-buying and short-selling strategies to profit from both the winners and losers during deflation; A 25-point plan--including ruthless cost cutting and low inventories--that will help your business survive and thrive during deflation. While the road to deflation may be bumpy, today's deflation will not spell another Great Depression. In fact, Dr. Shilling foresees as a period of 'good'deflation in which, in the long run, technological advances and increased competition may even serve to boost real income and productions. But you will have to reshape your thinking, sharpen your skills, and re-orient the focus of your portfolios. Businesses will have to develop new strategies. Individuals will have to retrench and find new ways to save money. Ignoring Dr. Gary Shilling's well-researched forecasts has often been a mistake--an expensive mistake. Don't miss this chance to read Deflation and prepare for tomorrow's dramatically different economic environment. It may be the best investment decision of your lifetime.

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Product Details

• Hardcover: 352 pages
• Publisher: Mcgraw-Hill (June 21, 1999)
• Language: English
• ISBN-10: 0071351817
• ISBN-13: 978-0071351812
• Product Dimensions: 9.2 x 6 x 1.2 inches
• Shipping Weight: 1.8 pounds
• Average Customer Review: 4.0 out of 5 stars  See all reviews (10 customer reviews)
• Amazon.com Sales Rank: #857,779 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

20 of 21 people found the following review helpful:

5.0 out of 5 stars Very Timely Investment Book for EVERYONE!, July 12, 2002

By	Dan E. Ross "Dan Ross" (Frisco, Tx USA) - See all my reviews (REAL NAME)

This review is from: Deflation: How to Survive & Thrive in the Coming Wave of Deflation (Paperback)

Having left Wall Street over a year ago I am amazed at how little attention the media, Wall Street & the Fed have given to Deflation. In my opinion the probability of a deflationary scenario is higher than ever. This book helps you prepare for such tumultuous economic times. I rank it a 5 star book, an increasingly rare rating for me. I gave this book five stars due to the excellent analysis and insightful commentary about what occurs in deflation and, more importantly, the graphical depictions the book has throughout it. It would be ignorant to mention that Mr. Shilling has been talking about deflation non-stop since the late 80's - especially after the '87 stock market crash. Can anyone remember the story about the boy who cried "WOLF!" too many times?

Talking finance without graphs is tough for the reader so I give kudos to Mr. Shilling in this regard.

As I like to say (and Mr. Shilling points this out), the 1980's was the age of government spending. The 1990's was the age of the consumer buying binge as individual debt levels have soared. The average person has $8500 in credit card debt vs. 2500 in 1990 to put it into perspective.

Moving forward, what will drive top-line growth in worldwide sales? - Did you know that the G-8 countries account for roughly 80% of total purchases worldwide and, as a result, weakness in those countries dramatically affects the world economy?

Will we end up with too much capacity due to stagnant growth or a retraction in corporate spending?

What will be the catalyst to drive economic growth? - The government has over $5 trillion in debt, corporations and individuals are tapped out and factories are running at about 76% of their utilization right now.

Buy the book........Read the book........Anyone can learn from this........By the way, bond prices have already soared so the easy money in bonds has been made.........

...If you are interested in economic history book I would encourage everyone to read The Worldly Philosophers by Robert Heilbroner since it is more international in scope and deals with the lives and times of the most famous economists in history. If you are interested in economic development I would encourage you to read Hernando DeSoto's Mystery of Capital but note his lack of focus on corruption in certain countries. A great general business book is by the management guru Peter Drucker entitled "The Essential Drucker."

17 of 18 people found the following review helpful:

5.0 out of 5 stars Changed My Investment Strategy Overnight, August 25, 2001

By	Charles C. Dunlap "dunlapcc" (Houston, Texas USA) - See all my reviews

I bought a bunch of investment books while on vacation, and this book by Gary Shilling was the last to be read only because of its relative size. First I looked at the date it was written, then thought about what he was saying, especially in his look-ahead comments, and he was "spot on" about today's environment. As a result, I moved 100% to the sidelines at the end of July, 2001, and have been smiling ever since. I then asked my wife to read it, and we both agree that Gary is most accurate in his assessment of economic trends. I was so impressed that I purchased his monthly "Insight" report. The book is a "must read", especially for those nearing retirement and must conserve their capital.

10 of 10 people found the following review helpful:

5.0 out of 5 stars Prescient., May 28, 2003

By	Gaetan Lion - See all my reviews (TOP 500 REVIEWER)    (REAL NAME)

This review is from: Deflation: How to Survive & Thrive in the Coming Wave of Deflation (Paperback)

I read this book years ago just when it came out (mid 90s). I did not pay that much attention afterwards. I thought at the time, it was mildly interesting. Man was I wrong. This book was right on the money half a decade ahead of time. In his book, he depicted perfectly well all the trends that would lead to a rather formidable deflation factor. At the time he wrote the book, Japan was probably close to entering its deflationary phase. But, no other country was. The rest of the World's central bankers were still busy fighting inflation.

Now, the picture has changed radically, and Gary Shilling anticipated current economic times perfectly