Deflation Hedges

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
Beensabu
Posts: 237
Joined: Sun Aug 14, 2016 3:22 pm

Deflation Hedges

Post by Beensabu » Thu Jul 11, 2019 12:51 am

For those who feel inclined to provide their actionable feedback:

If you intentionally hedge against deflation in your portfolio...

1. What do you use to do this?
2. How is it a viable hedge?
3. What percentage of your portfolio is it?
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next."

bluquark
Posts: 489
Joined: Mon Oct 22, 2018 2:30 pm

Re: Deflation Hedges

Post by bluquark » Thu Jul 11, 2019 1:36 am

Intermediate-term government bonds. By definition, the value of cash and fixed income increases during deflation, provided one avoids credit risk.

My AA is 35% fixed income, with cash and developed sovereign bonds being roughly half that -- of course, not exclusively or even primarily to protect against deflation. But it seems to me that a conventional AA has this risk well-covered with no need for anything exotic.

kfitz1313
Posts: 79
Joined: Sun May 19, 2019 3:20 am

Re: Deflation Hedges

Post by kfitz1313 » Thu Jul 11, 2019 3:17 am

Bonds and international equities. Deflation is a country (really a currency) specific problem. Just because one currency is experiencing deflation doesn't mean they all are.

columbia
Posts: 1634
Joined: Tue Aug 27, 2013 5:30 am

Re: Deflation Hedges

Post by columbia » Thu Jul 11, 2019 5:18 am

A long discussion here:
viewtopic.php?t=149156

Treasuries are your friend.

Topic Author
Beensabu
Posts: 237
Joined: Sun Aug 14, 2016 3:22 pm

Re: Deflation Hedges

Post by Beensabu » Thu Jul 11, 2019 11:00 pm

Thank you, bluquark, kfitz1313, and columbia!!! Much appreciated. :happy
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next."

Post Reply