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Published: Nov 06, 2015 5 min read

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Republican presidential candidate Senator Rand Paul, R-Ky., speaks at a presidential forum sponsored by Heritage Action at the Bon Secours Wellness Arena, September 18, 2015, in Greenville, S.C.
Richard Shiro—AP

With the S&P 500 up around 2,100, the stock market is again testing its all-time high. Investors who were sure the big bear market started in September have been clobbered. Inflation is at 0%, so low that the folks at the Fed are wondering how to get it up to the 2% target.

So who, in this environment, would be stuffing all their cash in money market funds and buying insurance against inflation? Republican Presidential candidate Rand Paul, that’s who. Paul has been decrying the debasement of the currency (and sometimes worrying about Weimar-like hyper-inflation). In a September op-ed he called a stock market crash “inevitable.”

With a stock market rally full swing, we decided to look back at Paul’s financial disclosure forms from the end of the summer to see whether Paul is putting his money where his mouth. In short: Oh yes, he does. As other folks are popping champagne corks, Paul is more or less stocking up on the financial equivalent of heat-and-eat meals and powdered milk, readying for the apocalypse.

The biggest holdings: Rand Paul’s biggest investment holdings are in Vanguard’s Inflation Protected Securities funds, in which he has two separate investments (one in a joint account) worth $100,000 to $250,000 each. The funds are basically invested in U.S. Treasury bonds that are indexed to inflation, and thus protected against the Fed monetary policies that Paul and his supporters criticize. You can think of these as “if things get really bad” investments: If indeed the Fed botches its job and inflation spikes up, these funds should do fine. But they are not “apocalypse is nigh” investments: In the unlikely case that the U.S. actually doesn’t pay its debts ... well, all bets on Treasuries are off.

Mattress money: Paul’s next biggest holding is $50,000 to $100,000 in a Vanguard money market fund. That’s one of a half dozen money-market accounts Paul and his family hold (two of them are listed as having $15,000 to $50,000; the others are smaller). A couple of them invest specifically in government-backed short term securities. These are the “if/when things get even worse” investments. It’s the belt-and-suspenders approach to capital preservation: If everything blows up you shouldn’t lose your money, and if even the money managers blow up then at least it’s not all in one place. Paul’s financial disclosure forms were completed in July. Back in August, this would have looked prescient. Now less so. Paul’s money seems to have been in these funds for a while (judging from his Senate financial disclosure), so he’s missed out on a lot of stock market gains in recent years.

The worst case scenarios: Rounding out Paul’s holdings are a few more funds in which he holds $15,000 to $50,000. A couple of them—one devoted to precious metals and minerals, and one to energy (read: oil)—are what you might expect of someone who likes the security of hard assets (find yourself a gold bug, and you’ll find a Rand Paul supporter).

More interesting might be two funds in which Paul has small holdings (under $15,000 in value) that are designed to profit when interest rates go up—the Profunds Rising Rates Opportunity Fund and the Rydex Inverse Government Long Strategy. These sound like a good idea in principle—interests rates really don’t have any room to move down—but the odds are stacked against them from the start: The Rydex fund, for example, has a brutal expense ratio of 3.16%.

In practice these last two funds have been extraordinarily efficient vehicles for losing money. Other funds that lose money as consistently generally close after a few years. So why haven’t these? It may be because the thesis that interest rates will jump as inflation spins out of control and folks around the world lose confidence in the U.S. currency is one of the most stubborn ideas in the marketplace of investing ideas. Perma-bears are good at digging in their heels.

Of course, if the financial apocalypse really does come, Paul will certainly have bought himself the right to say, “I told you so.”