Even if deflation is short term risk, what is your long term 'inflation' play?

B

ByLoSellHi

If you believe we will ultimately get hammered by a surge of inflation at some point within the next 3-5 years (it doesn't matter precisely when, just that you believe that we will), what's your 'ace in the hole' investment 'big move' in preparation for, or to hedge against, such an event?

Please keep this thread non-political, and don't just talk your book unless you're a true believer.

Thanks.
 
Simple... Buy uber-cheap TIPS breakevens. More expensive now than they were, say, at the end of last year, but still cheap as chips, if you believe in proper inflation.
 
10 year put swaptions struck at 300 basis points over the current 10 year swap rate are selling for 1.5 cents for dollar. Minimum trade is probably $150K (for a $10 million face value swaption). This is mostly available only to institutions, but there are desks that will do it for individuals.

Buy the swaption and stick it in a desk somewhere. Come back in 5 or 8 years and have a looksee.
 
Get a long dated fixed mortgage.


Tim Bond from Barcap recommends:
1)
Shorting financial assets (bonds and stocks)
2)
Shorting bonds against stocks
3)
Staying liquid to buy depressed financial assets
4)
Avoiding portfolio diversification and focusing on those assets that cause inflation
5)
Avoiding broad sector diversification in equity portfolios and staying long energy, materials and industrials against shorts in all other sectors, particularly consumer-related
Barclays Capital Global Asset Allocation Strategy 9
BARCAP_RESEARCH_TAG_FONDMI2NBUR7SWED
10 Global Asset Allocation Strategy Barclays Capital
6)
Replacing standard equity exposure with dividend swaps
7)
Owning inflation via pure breakevens, inflation swaps or – somewhat less effectively – linkers
8)
Owning actual and/or implied interest rate and equity volatility
9)
Owning some gold
 
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