dingqian1984
注册时间: 2005-02-07
帖子: 3
|
|
How to hedge against two scary scenarios
John Waggoner
This time of year, people like to sit around campfires, eat marshmallows, and tell stories about teen hikers who wind up in pickle jars at the Hell Kwik-E-Mart. Sometimes, it's just fun to scare ourselves. So today, we're going to look at how to protect your portfolio from scary economic periods.
The financial world can fall apart in any number of fascinating ways, but the two main worries are hyperinflation and deflation.
Hyperinflation means rapid, out-of-control inflation. The United States had a taste of high inflation in the 1970s. A basket of goods that cost $100 in 1970 soared to $212 in 1980, according to the Bureau of Labor Statistics.
That was bad enough, but hyperinflation is a soul-searing experience. In Germany from 1922 to 1923, for example, inflation raged at more than 300% — a month. In 1923, one U.S. dollar could buy a trillion German marks. According to author Adam Smith, the price of two cups of coffee rose 40% while customers were still drinking them.
The traditional remedy for inflation in general, and hyperinflation in particular, is gold. In periods of inflation — or even when people are worried about inflation — people buy tangible assets, such as real estate, commodities or precious metals. After all, anything you buy will cost more later.
In hyperinflationary periods, paper money is useless. People turn to barter, trading laundry services for, say, sheep. Because a sheep is a clumsy trade mechanism — try getting one into a parking meter — people often use gold as currency. Gold is portable and generally accepted as being valuable. When inflation soars, so does gold.
Gold mutual funds, which invest in gold-mining stocks, are one way to hedge against rising inflation. The earnings of gold-mining companies should jump if the price of gold rises.
For example, suppose you buy shares of a mine that produces gold for $300 an ounce. Then suppose gold rises to $500 an ounce from $436 — a 15% gain. But your mine's profit margin has jumped to $200 an ounce from $136 an ounce — a 47% gain.
You could also invest in Treasury Inflation-Protected Securities, or TIPS, which are inflation-adjusted bonds issued by the U.S. Treasury. These bonds are long-term IOUs backed by the government, and their payout is linked to changes in the consumer price index. One bonus: The government uses the CPI measure that includes food and energy, so they would jump if oil prices increased dramatically.
In hyperinflation, however, you'll want the yellow metal itself, preferably in bullion, such as U.S. Gold Eagle coins. They don't need to be assayed for purity, and they come in a variety of weights. Coins cost money to store and insure, but if inflation spiraled out of control, their value would soar.
Deflation is the opposite problem: Prices fall precipitously, in large part because the economy has plunged into a prolonged economic funk. For example, $100 in 1932 would buy the equivalent of $125 in 1929. This sounds great at first, except it was the Great Depression and few people had $100.
The cure for deflation: long-term Treasury securities. A T-note is an IOU issued by the government, and it pays a set amount of interest each year. A $1,000 T-note maturing in May 2015, for example, pays $41.25 in interest each year.
What's so swell about that? First, in a deflationary period, that $41.25 will buy a bit more each year. And, because T-bonds are guaranteed by the government, there's little chance that you won't get your interest — and on time, too. In a depression, not many other entities can promise that. So investors bid up the prices of Treasury notes and bonds in deflationary periods.
Financial catastrophe is a perennial topic for some investment advisers. "Some people are addicted to seeing catastrophe in the future," says author Peter Bernstein, publisher of the highly regarded institutional newsletter, Economics and Portfolio Strategy.
He's no Chicken Little. But he's worried enough about world economic conditions that a little hedging is in order, he says. "I never thought I'd recommend a position in gold," Bernstein says. His advice: Put some money in gold, some in long-term bonds to insure against hyperinflation and deflation. About 5% in each should be enough, depending on how scared you are.
What about the rest of your portfolio? "Deploy the rest on hopeful and optimistic assumptions," he says.
|
|
|
|
_________________
[url][/url][img][/img]
|
|
通知
日程表
