|
|
|
Stagflation
closer
06-15-2008, 10:40 AM | Post #2528694
| 0 |
  |
|
Sooner or later the Fed is going to have to start raising interest rates again to bring down inflation. At least since the 1980s, there has been a correlation between rising interest rates and lower gold prices, so gold may not be as effective as an inflation hedge (though it still hedges against geopolitical risk). In a sustained period of rising inflation and higher interest rates, I think an allocation to TIPS make sense; El-Erian suggests 5%, but I've seen higher recommendations. Floating-rate senior loan participation funds like FFRHX might again be a decent alternative to inflation-sensitive bonds. It's a question of balancing inflation and credit risks against those of other other bond sectors and asset classes. I would like to see some hard information on how various economic sectors performed during the rampant stagflation in the 1970s and early '80s.
Topics
alternative
correlation
credit risk
gold prices
HEDGE
View Complete Thread
|
|
|
