Really Informative M* Article on Inflation

[audreyh1]

Samuel Lee writes some great articles for Morningstar. I thought this one on inflation statistics was particularly informative as it covers all the "rival" inflation statistics and their implications. Great food for thought. Moving the Goal Posts

Williams himself [of Shadowstats] admitted in 2008 that, rather than performing the complicated task of collecting and computing the data necessary to calculate a CPI, he simply tacks on an "add factor" to the BLS' reported numbers.(7) If you subtract his adjusted CPI from the official CPI, the factor looks pretty much like a constant 7%.

BTW - It costs nothing to enroll to read Morningstar articles and the discussion forums. You only need a "premium membership" to get to some of the more advanced investment analysis features. If you haven't been taking advantage of the quality free info at M* - well, you should!

 

[marko]

FWIW I can't live without M* to help me view my portfolio and to see how some ideas might work out. Good articles, forum and sweet portfolio manager.

It's one of the few subscriptions I'd pay for (about $150 per year) if I didn't get it free via TRPrice.

 

[Chris M]

Samuel Lee writes some great articles for Morningstar. I thought this one on inflation statistics was particularly informative as it covers all the "rival" inflation statistics and their implications. Great food for thought. Moving the Goal Posts



BTW - It costs nothing to enroll to read Morningstar articles and the discussion forums. You only need a "premium membership" to get to some of the more advances investment analysis features. If you haven't been taking advantage of the quality free info at M* - well, you should!

I look forward to reading Lee's articles--they are consistently thought-provoking and well written. But I missed this one, thanks for pointing it out.

Chris

 

[ziggy29]

I don't think the CPI is a good indicator of the "real" inflation most people are feeling (people who don't have the money to buy big-ticket electronic goods getting a lot cheaper aren't getting the benefits of lower prices which offset the higher inflation in the food, energy, education and health care they do buy), and certain sneaky CPI tricks like "substitution" also understate it -- but just adding a constant to compensate for that (and substitution and other factors) is pretty silly.

 

[Lsbcal]

I liked the way the article read. At first it felt like the French Revolution with pitchforks out. Then it morphed into what I think is a reasonable conclusion.

BTW, one of my favorite writers on M* is Rekenthaler. The archives on his articles are here: //http://www.morningstar.com/articles/author/208-john-rekenthaler.aspx

 

[audreyh1]

I love the weekly economic reports posted by Bob Johnson. Fantastic research and very well presented. A great education for new investors. So many financial articles are fluff, it's a real pleasure to read such thoroughly researched pieces. Now he covers the US economy, not the markets. It's also important for investors to learn the distinction!

http://www.morningstar.com/articles/author/696-robert-johnson.aspx

 

[photoguy]

Thanks for posting. I remember looking at the shadowstats "inflation" figures a while ago and thinking exactly the same thing -- that it was bogus and the author just added a flat factor to the official figures (how else could the inflation graphs exactly mirror each other).

 

[donheff]

BTW - It costs nothing to enroll to read Morningstar articles and the discussion forums. You only need a "premium membership" to get to some of the more advanced investment analysis features. If you haven't been taking advantage of the quality free info at M* - well, you should!

Thanks. I added their news to my RSS feed. As for inflation, I am pretty comfortable with the BLS CPI figures. We have talked a lot about computing your "personal" rate of inflation but BLS has to accomodate the whole country and all it's instruments not just some cranky ER skeptics.