3 Ways to Manage Your Portfolios to Cope with World Wide Food Inflation

08/26/2011 0 comments

The Google map from www.econmatters.com shows how serious the world wide food crisis has become.

Legends:

Fist = Overthrown Governments
Flames = Actual food / inflation riots
Police = Protests / other riots
$ = Price increase announcements / Price Controls / Stock market issues
! = Strike in inflation / food related industries
Phone = Internet/ Twitter /shutdown

View Inflation Riots and Protests 2011 in a larger map


 
With global government monetary policies to stimulate economies and U.S. dollar devaluation, the problem can only become worse.

For a retirement investiment account such as 401K, IRA or a retiree's portfolio, here are 3 ways to fortify your portfolios:

  1. Consider having some exposure in commodities. This can be achieved by broad base commodity index ETFs or mutual funds such as PowerShares Commodity Index ETF (DBC). You can even go more specific to have some exposure in agriculture commodities by using Powershares agriculture ETF (DBA). Both of these ETFs have been relatively stable recently, even in a serious stock market stress (S&P 500 SPX down 6% year to date).
  2. Consider exposures in foreign currencies. The safest way is through U.S. dollar bearish ETFs such as UDN (U.S. dollar down) or some individual currency ETFs such as CurrencyShares Australia dollar (FXA) or Canadian dollar (FXC).
  3. Consider some exposures in inflation protected bonds such as TIP or WIP (international inflation protected bond ETF). However, given recent runup on these ETFs, one should wait for a better entry point.
However how meaningful an investing theory is, one should still put this under an overall portfolio asset allocation framework. The following are some related investment portfolios/plans:

Six Core Asset ETFs: it gives exposures in commodities through DBC.

MyPlanIQ Diversified Core Allocation ETF Plan: diversified portfolios allow exposures in commodities, gold (GLD) and TIP/WIP.

Permanent Portfolio ETF Plan: Permanent portfolios that have exposures in gold, silver (SLV) and hard assets.

Symbols: SPX, COMP, DBC, DBA, GLD, TIP, WIP, SLV, Portfolio Strategy & Asset Allocation


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