Dr. A. Gary Shilling is president of A. Gary Shilling & Company, Inc., economic consultants and investment advisors, managing individual and institutional accounts. The firm also publishes INSIGHT, a monthly report of economic forecasts and investment strategy, and Dr. Shilling advises Thematic Investment Partners and Thematic Futures Fund, investment partnerships oriented toward economic, financial, and political themes. A regular columnist for Forbes magazine, he has been twice ranked as Wall Street's top economist by Institutional Investor magazine's poll of financial institutions , and Futures magazine ranked him the country's number one Commodity Trading Advisor in 1993. Although Dr. Shilling does not yet manage any mutual funds, CNBC anchor Bill Griffeth was so impressed with his investment approach that he profiled him along with 19 well-known mutual fund managers in his 1995 book, The Mutual Fund Masters.
Dr. Shilling is well known for his forecasting record. In the spring of 1969 he was among the few who correctly saw that a recession would start late in the year. In 1973 he stood almost alone in forecasting that the world was entering a massive inventory building spree to be followed by the first major worldwide recession since the 1930s. In the late 1970s, when most thought that raging inflation would last forever, he was the first to predict that the changing political mood of the country would lead to an end of severe inflation, as well as to potentially serious financial and economic readjustment problems.
His first book, co-authored with Kiril Sokoloff, was published by McGraw-Hill in the spring of 1983 and entitled Is Inflation Ending? Are You Ready? In it, the authors answered the first question in the title with a resounding yes. But to the second they said, no, you're not ready. Your investments, your business, and your personal life are geared to inflation lasting forever, not disinflation. Your portfolio is crammed full of tangible assets like coins, antiques, and real estate the great inflation hedges of the 1965-80 era of accelerating prices, but assets that would suffer as inflation rates fell. At the same time, you own far too few financial assets, especially stocks and bonds disastrous investments in periods of high inflation, but great winners in disinflation.
Inflation, however, was so deeply ingrained in everyone's thinking that the initial signs of its exit were ignored. The book's reviewers basically dismissed the authors' ideas. But by the mid 1980s, their forecast of inflation's demise began to look credible. In a delayed victory of sorts, David Warsh of the Boston Globe essentially reviewed the book in that newspaper's March 13, 1986, edition, and Bruce Ramsey did the same for the April 2, 1986, issue of the Seattle Post Intelligence in an article entitled "A preposterous economic prediction that came true."
By then inflation rates not only had fallen considerably, but stocks and bonds were thriving while tangibles were in trouble. Dr. Shilling was convinced that more of the same lay ahead because the world of shortages seemed to be over and a world of surpluses was in prospect. His second book, The World Has Definitely Changed New Economic Forces and Their Implications for the Next Decade (Lakeview Press, 1986) , spelled out this thesis.
The 1987 stock market crash raised the possibility that deflation and not just low inflation might be in the cards, and his third book, After the Crash, Recession or Depression? (Lakeview Economic Services, 1988), explored this idea. Despite the title, he wasn't specifically forecasting deflation, but came closer to doing so when he, assisted by Anne D. Willard, created "The Deflation Game" in 1989. It's a Monopoly-like board game that is biased toward winning with financial asset holdings and losing with tangibles.
Dr. Shilling is widely recognized as the world's oldest living disinflationist, since his forecast of low inflation is over 20 years old and his suggestion of possible deflation has been around for about a decade.
He received his A.B. degree in physics, magna cum laude, from Amherst College, where he was also elected to Phi Beta Kappa and Sigma Xi. He earned his M.A. and Ph.D. in economics at Stanford University. Before establishing his own firm in 1978, Dr. Shilling was Senior Vice President and Chief Economist of White, Weld & Co., Inc. Earlier he set up the Economics Department at Merrill Lynch, Pierce, Fenner & Smith at age 29 and served as the firm's first chief economist. Prior to Merrill Lynch, he was with Standard Oil Co. (N.J.) where he was in charge of U.S. and Canadian economic analysis and forecasting.
In addition to writing for Forbes, Dr. Shilling is a columnist for Standard & Poor's CreditWeek and a member of The Nihon Keizai Shimbun (Japan Economic Journal) Board of Economists. He appears frequently on business radio and television shows.
Dr. Shilling is on the Board of Directors of National Life of Vermont, the Heartland Group of mutual funds, the American Productivity and Quality Center, Palm Harbor Homes, the Episcopal Evangelism Foundation of which he is Chairman; an Advisory Director of Austin Trust Company; a Trustee and the Treasurer of the General Theological Seminary (Episcopal); and a Chairman of the New Jersey State Revenue Forecasting Advisory Commission. He is also an avid beekeeper.
