Many investors are worrying about inflation these days. There is certainly a good case that can be made for inflation as an eventual consequence to the vast amounts of debt being issued by many governments. Matthew Bandyk, writing for U.S. News and World Report, looked at some investment possibilities for hedging against inflation. His article points out that about half of the economists surveyed believe the Fed will keep inflation under control, while 41% believe that there will be significant inflation. In other words, inflation does not seem to be a foregone conclusion.
Just in case, Mr. Bandyk looks at three major areas as possible inflation hedges. These would be investments whose value can resist a weakening dollar or rising consumer-good prices. He examines TIPS (Treasury inflation-protected securities), gold, and real estate and concludes that no single hedge works for all inflation situations. We agree and further suggest that rather than focusing on forecasts for a single asset class, investors utilize a strategy that has the ability to shift among a variety of asset classes as dictated by which ones are actually working.
