Investing to beat inflation
It’s been about 30 years since the last serious bout of inflation in the U.S., says Dave Kansas in The Wall Street Journal, but it looks like the “once-tamed inflation beast” might “still have some bite.” And the strategies to beat inflation in the 1970s—real estate, for example—may not work so well now. So what to do? It may sound counterintuitive, with oil prices falling, but consider investing 10 percent of your portfolio in commodities, in commodity-focused mutual funds or exchange-traded funds. Now’s also a good time to look at Treasury Inflation-Protected Securities (TIPS). And look for sectors with “pricing power,” which today might be railroads and steelmakers.
Why gas isn’t so expensive, really
Gas prices hit record highs this summer, say Indur M. Goklany and Jerry Taylor in the Los Angeles Times, but fuel “is more affordable for American families now than it was in the days of the gas-guzzling muscle cars of the early 1960s.” That’s because we’re making income gains that outpace gasoline price hikes. For example, from last June to this one, average disposable income rose by $1,627, while the average gas expenditure rose $490. Everything else rose, too, except house values, but if you’re worse off than last year, don’t blame gas.
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