Slipping however tenuously into the front-runner's slot for the GOP presidential caucuses in Iowa has apparently made Ron Paul the target du jour. In addition to getting questioned over his racist newsletters by CNN's Gloria Borger Wednesday, Total Return,
The Wall Street Journal's personal finance blog, decided to
take a look at his investment portfolio via his mandated
congressional financial disclosure form filed last May.
Because the form requires only a range of amounts instead of exact figures, the portfolio at the time was worth between $2.44 million and $5.46 million:
At our request, William Bernstein, an investment manager at Efficient Portfolio Advisors in Eastford, Conn., reviewed Rep. Paul’s portfolio as set out in the annual disclosure statement. Mr. Bernstein says he has never seen such an extreme bet on economic catastrophe. ”This portfolio is a half-step away from a cellar-full of canned goods and nine-millimeter rounds,” he says.
There are many possible doomsday scenarios for the U.S. economy and financial markets, explains Mr. Bernstein, and Rep. Paul’s portfolio protects against only one of them: unexpected inflation accompanied by a collapse in the value of the dollar. If deflation (to name one other possibility) occurs instead, “this portfolio is at great risk” because of its lack of bonds and high exposure to gold.
There's plenty to criticize Dr. Paul about, including his views on race, gays, reproductive rights, foreign aid, Social Security and Christian supremacy, to name a few. But, seriously, his investment portfolio? A portfolio that no matter how perilously wrong-headed it may seem to some analysts, or at least to Bill Bernstein, is utterly consistent with the Congressman's long-stated views? That makes the criticism seem like a gratuitous hit piece.
Will the Journal next seek to take a look at what, say, Mitt Romney's got in his portfolio as well as his cellar? After all, the General Authorities of the Church of Latter Day Saints have long issued strong guidelines regarding disaster preparedness based on self reliance. Church leaders urge Mormons to avoid debt and store a year's worth of food and survival gear, including items of self defense. One should expect those caches to include a few 9mm cartridges along with the canned goods.
Does that make them crazy or smart? The typical American family doesn't have enough stored water to last a day after a disaster or anywhere near enough money for retirement. And one of the reasons for the latter is that they followed the financial advice of some experts who didn't see the 2007 crash coming.
Congressman Paul's portfolio may well make him subject to risks that he should reduce. But how many highly diversified, risk-attenuating 401k accounts wound up busted in the Great Recession? Paul is ridiculously wrong about oh-so-many-things, but his multi-million-dollar portfolio choices are far from proven to be among them.
