Bill Gross AGAIN
I started with Bill Gross and I’m ending with him, too. Part of his latest diatribe includes recommending longer-term Treasury Inflation-Protected Securities as a hedge against accelerating inflation.
While some analysts speculate that rising interest rates will lead to higher inflation, it’s not exactly a new topic. Arthur Laffer wrote an op-ed in the Wall Street Journal two years ago entitled “Get Ready for Inflation and Higher Interest Rates.” We saw the rising interest rates, but inflation is still very subdued. I don’t doubt that inflation will creep back into our lives … but not in the immediate future.
Therefore, I’d avoid DWS Global Inflation (TIPAX), a one-star-rated fund that is down 11% year-to-date through September 11. In the long-term, I could see a reason for including it in your portfolio, but not before taking advantage of at least another 6-12 months of rising equity markets. When inflation becomes obvious, then it will be time to act.
Until then, you’re going with a “prevent defense” — something that almost never works.
As of this writing, Will Ashworth did not own a position in any of the aforementioned securities.