THE THREAT OF INFLATION 59but in real terms, it’s becoming more valuable every day.
The third thing cash offers you is optionality or the abil-
ity to pivot. You might not be in cash forever, but you should
consider having some now.
That way, you’re ready for anything. If deflation takes off
you’re glad you have bonds.
If inflation takes off you’re glad you got the gold and other
hard assets.
And, if there’s confusion, you’re glad you have the cash be-
cause it reduces your volatility and lets you pick up bargains.
If the market crashes and you have equities in one part of
your portfolio, you might lose on that. But then, you have cash
and can go buy bargains. That’s the way the smartest investors
do it. They’re ready for anything.
■ Hugo Stinnes: The inflation King
Hugo Stinnes is practically unknown today, but this was not
always the case. In the early 1920s, he was the wealthiest man
in Germany, at a time when the country was the world’s third-
largest economy.
He was a prominent industrialist and investor with diverse
holdings in Germany and abroad. Chancellors and Cabinet
ministers of the newly formed Weimar Republic routinely
sought his advice on economic and political problems.
In many ways, Stinnes played a role in Germany similar
to the role Warren Buffett plays in the U.S. today. He was an
ultra-wealthy investor whose opinion was eagerly sought on
important political matters, who exercised powerful behind-
the-scenes influence and who seemed to make all the right
moves when it came to playing markets.
If you’re a student of economic history, you know that from
1922–1923 Germany suffered the worst hyperinflation experi-
enced by a major industrial economy in modern times. As I ex-