Interesting predictions from John Paulson, the Hedge Fund guy that made billions by predicting the mortgage crisis and shorting sub-prime mortgages. I hope that John is right about it being time to buy stocks and homes but is overshooting what inflation will do. I also hope that less money will go to gold since it is not a productive asset and goes into other investments that will drive innovation and grow the economy.
From Forbes: It could be time to sell your low-yielding bonds and replace them with higher-yielding common stocks. "John Paulson ... told a standing room only crowd at New York’s University Club that double-digit inflation is about to rear its ugly head by 2012, killing the bond market, and restoring strength to equities and gold."
In regard to homes he said "As this is the best time in 50 years to buy homes, Paulson advised his listeners ... to issue (take out) 30 year mortgages to buy a home as “your debt and interest payments get locked in at record lows, while the price of your home will rise. If you don’t own a home buy one,” Paulson recommended; ” if you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home.” See the whole article on Forbes.com. Separately, he and his wife recently bought a $24.5M home in Aspen so he is putting his money where is mouth is.
The future is hard to predict but home prices are off considerably even for the best and most unique homes and interest rates are very low so even with a moderate increase in inflation todays borrowing costs will become even lower in real terms.