You might find this interesting, from LA Times, today, a little history provided by James Grant:
"DuPont bought oil giant Conoco in l981, for 7.6 billion, when many smart people assumed that oil was going to $50 a barrel.
That was, instead, the peak for oil. DuPont would have been far better off in l981 buying Treasury bonds, which then paid annual interest rates of 15.75%, because many investors were convinced inflation would continue to rise forever.
Today, with oil near $13 a barrel, DuPont in seeking to sell Conoco - because there is little faith in oil prices ever accelerating again.
Insead, investors are happy to accept 5.5% Treasury bond yields, on the assumption that inflation is never coming back.
An interesting thought to ponder, even if you think Grant and Tice (David Tice) are living in fantasy worlds." |
