Santangel's Review

Commentary

Presentation by Arnold Van De Berg of Century Asset Management

Arnold Van De Berg manages Century Asset Management, whose main fund has a 13.3% net return since its 1974 inception.  Despite being interviewed in Outstanding Investor’s Digest and other publications, he remains very much below the radar. We enjoy his periodic interviews and find he usually has a number of original thoughts. His recent “Luncheon Review” was no different. This two-hour video provides a fairly optimistic take on the economy with statistics and research to back it up. You can watch the video in its entirety or skip the section that interests you. For those of you short on time, we recommend the first 30 minutes.

Some highlights:

  • The media almost never shows the positive sides of stories and is not pointing out some of the areas where the economy is improving
  • There are serious problems in the US and worldwide, but there are also trends going in the opposite direction
  • Thinks we need to create 165,000 new jobs per month to get unemployment down to 5.5%.  In the last year, we averaged 72,000 new jobs per month which is not going to be adequate. But the last few months have been around 160,000.
  • Based on voting trends – the people of America are realizing that the business of America is “business”
  • The economy is expanding slowly but doing so without help from real estate which is traditionally 28% of the economy. If real estate comes back, we will get a big boost
  • Thinks it will take 24 months to get through the housing inventory glut – this is his most probable case. His worst case scenario is 3-4 more years
  • He thinks that reserves injected into the system (QE1 and QE2) can be successfully pulled back before there is inflation (The Japanese did it).
  • Banks are not lending money because there is little demand to borrow which is limiting inflation risk
  • If the Fed fails to pull the reserves back because of political factors, then we need to worry about inflation. Thinks we have 6 months for this to happen
  • Thinks the dollar is cheap and it could shock people when it rises.