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Basically I think it is quite obvious that quantitative easing (QE) will be pulled back eventually and countries will start to tighten their monetary policy. When that happens, what kind of assets will be able to hold their value, and hopefully appreciate?

I know commodities are a good inflation hedge, however when QEs are gone, I think what will happen is disinflation (reduced inflation). Things like collectible items may be good, but they are beyond the reach of a normal investor.

Any other suggestions?

AZhu
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Take defensive positions that will protect you from the scenario you anticipate,

  • short emerging markets (EM)
  • buy fixed income securities that will protect you from your expected changes in the shape of the yield curve
  • buy US Dollar currency futures, forward contracts, or options on futures

For example, go long USD/THB where THB = Thai Baht. THB is one of the few convertible currencies among emerging markets. There are a few forex brokers who will do this transaction. The cost of the trade is likely to be high though.

In your scenario, the US dollar will be king, eventually ... even if, ultimately, only temporarily :)

Ellie K
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user11575
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