Looking across all the articles and research I've read, these three ships are a good synopsis of the most commonly used arguments against
stocks as an inflation hedge.
Traditionally, investors have looked at
gold as an inflation hedge and, sometimes, as an asset to protect them only in times of financial distress.
They can be a good asset class for diversification and
act as an inflation hedge, but investors should be prepared for wild swings dependent on supply and demand of the given commodity.
I liked the overall content as it provided some good information if you are concerned about rates moving up and a 10 year term
as an inflation hedge mortgage strategy.
With the recent shift in shorter term mortgage rates a second look at the 10 year fixed
term as an inflation hedge mortgage strategy may be a timely.
The confusion has created a buying opportunity for people who understand the primary role of real estate
investing as an inflation hedge and income generator.
On mortgage front, I believe if we continue live in the current home, then the fixed payment will
act as inflation hedge.
In addition, an investment property, specifically mobile home parks, is a hard asset which can be
used as an inflation hedge (rents and property values typically rise in an inflationary market).
But since inflation is expected to remain at about 2 percent per year for the foreseeable future, commercial real estate investors are advised to look at the overall performance of a property or pooled investment fund rather than its
utility as an inflation hedge, says Martha Peyton, CRE, managing director and head of Global Real Estate Strategy and Research at TIAA - CREF in Newport Beach, Calif..
And as argued in one of my previous columns, «Real
estate as an inflation hedge,» we could be nearing a resumption of the inflationary environment given the historic amounts of currency that have been printed by central banks around the world.
For example, we can focus on stocks with relatively stable revenues and profit margins, we can hold securities that tend to behave
well as inflation hedges, and so forth, but at present, the Funds remain reasonably defensive in both the stock and bond markets.
Are Treasury Inflation Protected Securities (TIPS), for which the Treasury adjusts the principal based on the Consumer Price Index for all urban consumers (CPI - U),
effective as an inflation hedge?
None of my discussion in this series of posts confuses
assets as an inflation hedge with holding assets to achieve adequate long - term returns.
One of the greatest benefits of the best self directed IRA is the ability to perform direct real estate investing which is becoming the preferred option for several investors due to its
features as an inflation hedge and portfolio diversifier.
According to research by TIAA - CREF Global Real Estate that compares how well various asset types
perform as inflation hedges, among 5,000 portfolios with five - year holding periods, but with random starting years from 1978 to 2011, the National Council of Real Estate Investment Fiduciaries Property Index's total returns for commercial real estate beat inflation 84 percent of the time, and by a huge 698 basis points, on average.
But since inflation is expected to remain at about 2 percent per year for the foreseeable future, Martha Peyton advises investors to look at the overall performance of a property or pooled investment fund rather than its
utility as an inflation hedge.
The fixed income component is designed to lower volatility with a broad mix of investment - grade government and corporate bonds, plus some real - return bonds, which
act as an inflation hedge and have low correlation with other asset classes.
«Gross and his colleagues have been buying TIPS and gold
as inflation hedge this year.»
Pigeon - holing gold
as an inflation hedge is a common mistake investors and analysts make.
The precious metal touched a two - week high today, amid easing concerns that the Fed is near to raising interest rates, reviving gold
as an inflation hedge.
Recently I added a small portion of my portfolio allocated to Emerging Markets (5 %) & Precious Metals (5 % —
as an inflation hedge).
Given also gold's notorious volatility, it probably makes sense to use special inflation protected securities, rather than gold,
as an inflation hedge.
He may be using
it as an inflation hedge against higher interest rates.
Interestingly, adding a commodity exposure enhances an equity portfolio's return only during periods when the Federal Reserve is increasing interest rates, which is consistent with the belief that a major attraction of commodities is that they serve
as an inflation hedge.
So, climb aboard the U.S.S. Mindfully Investing as we sail once again into the debate surrounding stocks
as an inflation hedge.
I reviewed many articles and research papers, and I found three common arguments against stocks
as an inflation hedge:
My last post dove into the swirling waters of stocks
as an inflation hedge.
Our first destination is an article by Howard Gold in 2012 at MarketWatch titled «Don't Count on Stocks
as an Inflation Hedge».
Despite the high boredom potential, I'm planning a series of posts to pull apart the Gordian knot of stocks
as an inflation hedge.
Rents go up in inflationary times and act
as an inflation hedge.