What if Ayn Rand's iconic hero from Atlas Shrugged were among us? How would John Galt invest? The obvious answer would be to look at the advice given by the libertarian hero's self-proclaimed followers.
There is an abundance of high profile libertarian investors from Peter Schiff to Peter Thiel. Asset allocation and stock picks vary little across investors and (more worryingly) across time. Here are the five basics principles of libertarian investing:
- A visceral hatred for the U.S. dollar that extends to all U.S. dollar-denominated assets, from stocks to bonds – especially Treasuries.
- An unconditional love for precious metals, regardless of valuations. Commodities also rank high in libertarian portfolios.
- A blind faith in the "3Gs": Gold, guns and groceries (ranked in this order)
- A preference for large companies with steady dividends. Only a handful of U.S. companies would make the cut, such as Johnson & Johnson (JNJ), Procter & Gamble (PG) and Colgate Palmolive (CL). European blue chips, such as Unilever, Nestle and Arcelor-Mittal are preferred because of their higher dividends and greater distance from the Federal Reserve and the U.S. politicians – Lucifer and his army of devils in libertarian cosmogony.
- A general distrust for anything that smells of Fed-handed bailouts – including banks, insurers, car-makers and conglomerates such as General Electric.
I doubt that John Galt would invest with his self-proclaimed followers. For one, they are horrible investors. The "libertarian portfolio" has taken a beating lately. Gold and the SPDR Gold Trust (GLD) are down 20% from the peak. The U.S. dollar index has gained 11% since late April. European blue chips have sunk with the continent's finances. Domestic value stocks have underperformed both cyclical and growth-oriented stocks as the U.S. economy proved surprisingly resilient in recent months.
http://www.forbes.com/sites/greatspeculations/2011/12/30/steve-jobs-was-the-modern-day-john-galt/?feed=rss_home
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