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No. of Recommendations: 12
I keep hearing smart people, most recently Ray Dalio, say inflation is on its way. I have proven to myself that I have absolutely no ability to make macro economic calls. That said, assuming inflation might be coming what investments would do the best?

Here is my theory on what a good investment if inflation would start rising.

1) Not fixed income, with the possible exception of TIPS. However with current rates on TIPS, you can scratch TIPs.
2) Cash might be better than bonds, but will not return much.
3) Domestic Equities Looking for something that would have the following characteristics.
a. More fixed expenses versus variable expenses. This would include real estate, utilities and natural resource providers.
b. Have pricing power. Scratch utilities with their normally regulated pricing. Scratch REITs with longer lease periods, but favor those with shorter lease periods such as lodging, apartments or storage.
c. Moderate amount of debt, that the company is having no problem in serving. That the average debt maturity is preferably 5 years or more. A lot of preferreds would be ideal.
d. Reasonably good company, with good management and reasonably priced in relation to today's low interest environment.
4) Foreign Equities - Inflation is primarily a currency phenomenon and getting into other currencies diversifies inflation risk. This was true in 1920's Germany and Argentina over the last 30-40 years.

1) Agree or disagree.
2) Know any quality apartment or storage REITs, with good managements, trading at reasonable valuations given today's low interest rate environment with higher valuations and having a moderate amount of debt with longer maturities OR considerable preferreds.
3) Any other REIT sector have significantly short lease terms and other current reasonably good fundamentals. I have bought one timber REIT, but I consider it more of a natural resource stock than a real estate stock.

VM Long some energy, but less than normal, some British mining stocks (RIO & NGLOY), RYN (timber REIT), added some other foreign equities this year - UL, DEO & ERIC.

Also long the following REITs - KIM, BRX, KRG & LXP - none of which I think would do that well if inflation kicked up especially LXP.
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