Jason Kaspar's Annual Letter to Investors
Up-and-coming value investor Jason Kaspar provides interesting financial commentary in his 2008 letter to investors. Kaspar's understanding of the ongoing financial crisis enabled him to post strongly positive numbers in 2008. In his letter to investors, Kaspar argues, among other things, that acceleration of inflation is only a matter of time. We agree with this view.
Here is an excerpt of Kaspar's commentary:
The inflation, deflation question mentioned in the previous letter continues to rage. Unfortunately, it has also become probably the single most important question in investing as whichever occurs will most likely be a several standard deviation event impacting every single investment down to the microcap company. In my mind, it has become when, not if, inflation will occur. By the end of 2009 or maybe not until 2012 to 2015? The deflationary forces will continue to be massive with option ARM and consumer credit blowing up in 2009 into 2010 and the wave of corporate defaults starting in 2010 into 2012. This will spread to sovereign nation debt and emerging markets. Will the government be able to create “dollar currency inflation” while this is occurring? Basically, when inflation rears its ugly head will the result be true inflation or a “currency inflation” where real economic activity continues to decline but trust in government currencies also plummet creating a scenario of “depression currency inflation?” This type of economic environment is something that does not exist in working memory outside of maybe the very elderly in Germany. The rest of this letter will be focused on money, value, and monetary history. Some of the following thoughts will be much more theoretical and philosophical which many readers may find boring and even useless. It has been what has consumed my mind over the past few months as we enter into a new era of economics with the government saying the United States may spiral to its death but it will not be because of dollar deflation.