What to Do About Inflation—and What Not to Do

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Where is the inflation? There's no evidence of it. In fact some are concerned about deflation.

Speculator of KS 9:44PM February 27, 2010

I have never liked TIPS. If there is no inflation, you get a 6-month interest rate, but commit to 20 or 30 years. If there is inflation, you get taxed today on the (phantom) inflation adjustment you can't touch til maturity.
Real estate is a tough one right now. Maybe a REIT on the commercial side, but as a small piece of a portfolio.
Gold is really hard for the average person to buy. You don't get dividends from a pile of metal either.

Tiny Tuna of IL 6:13PM February 26, 2010

If the CPI starts spiking upward, the government will likely find a way to tamp it back down by revising its calculation. When you think about such things the "weighting" of individual items in an average, or product "substitutions" of new things in the place of old things, or subjective "adjustments" for how much better a newer product might supposedly be than an older one, you're unlikely to ever get a true picture from CPI. Even without some grand conspiracy, it's not hard to imagine this thing being easily manipulated. I frankly think it has been for decades.
A good simple measure of "real" price inflation might be to just take a look at the national retail prices over the last 30 years for going to the dentist and getting (just) your teeth cleaned and a set of full mouth x-rays with oral exam. This hasn't changed much, it's widely done, and I can assure you that Delta Dental has all the data in their archives that you would need to compute it accurately for comparison to the hokum we're fed with CPI.

Muser of NM 3:40PM February 23, 2010

If inflation were to return, you recommend an investor could be protected by having been invested in TIPS, Real Estate and Gold. All of which are poor investments except IF inflation returned. I don't think it is wise to put much of one;s portfolio in these 3 because there are very good arguments as to why inflation will be quite weak for the foreseeable future (worldwide weak employment and manufacturing over capacity for example). What would be so wrong with locking in 6 - 8% rates in fixed income, MLPs and even some utilities and individual stocks? One will turn out far better if the big inflation so many fear does not return.

Marty of FL 2:08PM February 22, 2010