The Argentina Project and their Merval Stock Index

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• I call what we are living in the US/Canada/UK and much of Europe, the Argentina Project.

• Argentina was once one of the wealthiest and most prosperous countries in the world, but corruption, political instability and economic mismanagement brought about a series of crises resulting in currency devaluation and hyperinflation.

• Other countries have experienced similar or worse inflation, but Argentina's experience seems a little closer to ours.

• How high can interest rates go for us? Consider Argentina with 100% inflation and 130% interest rates. Not a typo.

• Every nation is different, but in my view, we appear to be going down a similar path. I'm not predicting hyperinflation, but when you see the same playbook being used, shouldn't we expect a similar result?

• Below you see Argentina's Merval stock index. One of the few ways an Argentinian could have partially protected their purchasing power against the ravages of inflation was to be fully invested in their stock market. The Merval Index has shot up 700% in the last 1.25 years.

• I'm not suggesting this allocation for our retirees. But I think we are already in uncharted territory that will make it challenging to keep up with fixed rate investments.

• A new approach to diversification may be needed, as we are entering a new phase in the global and Canadian economies; one focused on hard assets, energy and materials.