JHU's Hanke: Inflation looms; buy dividend stocks
Johns Hopkins economist and Forbes columnist Steve Hanke is worried as usual about inflation, although how consumer price inflation becomes a problem in a world with so much excess capacity is a puzzler. Lavish monetary stimulus these days produces not consumer inflation but asset inflation -- ie., soaring prices of stocks and other assets. In addition to gold and commodities, Hanke recommends several stocks paying good dividends. Read the whole Forbes column here.
With the Fed intent on keeping interest rates artificially low for an extended period of time, some of my previous recommendations should still work well. In September I recommended tapping into gold and commodities via the SPDR Gold Shares (GLD), iShares S&P GSCI Commodity-Indexed Trust (GSG) and PowerShares DB Commodity Index Tracking Fund (DBC). Since then, these funds have appreciated by 13% to 15%, while the S&P 500 has notched a 9.2% gain. Retain these positions to protect your portfolio from the Fed.
With the inflationary wolf at the door, what's an income investor to do? Go for dividends.