6 Stocks to Hedge Your Inflation Risk

One shouldn't overstate the problem: Given the spare capacity in the economy, inflation is unlikely to be an immediate risk. However, investors shouldn't turn a blind eye to the medium-term risk: It's entirely possible (dare I say likely) that Fed Chairman Ben Bernanke has grossly overestimated his ability to stuff the inflation genie back into its lamp if it is unleashed. In that context, investors should consider now what sort of assets would offer effective protection against a loss in purchasing power. The new dynamics of wage inflationWith unemployment at 9%, only Chicken Littles are concerned about inflation. Think again. That 9% figure is misleading. If you believe, as I do, that the unemployment rate that represents full employment has increased during this crisis, the economy could experience upward pressure on wages ahead of the predictions of Fed models. In other words, if full employment occurs with 7% unemployment instead of 5%, the people who are employed could demand and obtain higher wages sooner than we expect. Note, for example, that the unemployment rate among college graduates was just 4.2% in January.... Read more