Review of Book Entitled Protecting against Inflation--and Maximizing Yield: Comment

Abstract

I wish to thank Mr. Robert Puelz (1988) for his numerous complimentary remarks in his review of my book entitled Protecting Against Inflation -and Maximizing Yield. The book was intended to sensitize financial service professionals to the horrors of decreased purchasing power; to provide useful information about insurance product performance; and to provide clear information about Life of Georgia's experience with the Cost of Living policy, in the hope that other insurers will answer the challenge of inflation. I am glad that Puelz found the ideas about future financial products to be thought-provoking. However, there are a number of points which I would like to clarify. Puelz states: Although written with an fund manager in mind, this book can just as easily be understood by a novice. The book was, in fact, written for investment novices among whom are: persons supervising or reviewing the work of fund managers, but who are not professional managers themselves; persons designing financial services products; owners of some financial services products, who are expected to make their own decisions in spite of a lack of professional expertise in the field (this would include owners of universal-variable plans and numerous other products); and life insurance agents and financial services professionals who find themselves in the position of discussing strategy questions with clients. Investment results have become too important to leave solely to the fund managers. I take exception to Puelz's remark: In some ways the credibility of the book is tainted by the inclusion of the chapter on That chapter reaches the optimistic conclusion that performance can overcome inflation. This is a fundamental point, making the various financial services products viable. Because of this fundamental point, and because this is a book about inflation, it was necessary to explore how performance, which might overcome inflation, could best be achieved. The chapter on investments certainly did need to be included. Mr. Puelz discusses the Theory of the Economic Series, which is at the core of my strategy. I will summarize the strategy as follows: -The