On 2009-01-14 02:23:05 -0800, norak <k.norak[at]gmail.com> said:

- quote -

A glaring omission of that advice is the absence of real estate,
including home ownership. Don't be misled by the fact that the housing
market is down at the present time along with the stock market. Owning
one's home can be great protection and a significant portion of net
worth. Another thing that should be looked at is your participation in
various pension plans. For example, if you have company pensions,
annuities, eligibility for Social Security, etc., a large portion of
the value of these could fall under a category that also includes
bonds. Instead of bonds, I would prefer to say "fixed-income
investments", or maybe just a category called "cash." If I had a
pension that will pay a fixed monthly income at retirement, I would not
want to load up on bonds in addition. You should also pay attention to
what proportion of your pension funds are in stocks. That 1/3, 1/3,1/3
division leaves too much unsnswered.

On Jan 14, 4:23*am, norak <k.no...[at]gmail.com> wrote:
- quote -

The only near-risk-free way I know of doing this is using TIPS/I-
bonds.
It may not be the best way because your after-tax returns may
end up trailing inflation slightly. Because of the way taxes are
handled, TIPS should be bought in a tax-advantaged account
(such as an IRA) and I-bonds with regular taxable money.

- quote -

I have heard all kinds of things with respect to how to divide
your assets such as:
- stocks, bonds;
- stocks, bonds, real-estate;
- stocks, bonds, real-estate, cash;
- stocks, bonds, real-estate, commodities;
- etc.

My personal view (and I don't consider myself an expert since
I haven't been investing long enough) is that this doesn't always
protect you. The reason is that the markets are manipulated.
It's hard to trust company balance sheets nowadays, and many
companies are going under which means defaults on bonds.
As for real-estate, I don't think the mess is anywhere near over.

Anoop

On 2009-01-14, norak <k.norak[at]gmail.com> wrote:
- quote -

No, it is not good advice because it does not even consider the prices
of stocks, bonds or precious metals. Following advice like this, you
are guaranteed to overpay for stuff. Any advice on "portfolio asset
allocation" that ignores prices, is bad advice.


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Stagflation, a rise in prices during periods of economics stagnation,
occurred in the 1970s and occurred again in 2007-08 before making a
transition into deflation.

What is the best way I can protect myself against stagflation? Should
I invest in precious metals, mining companies, energy companies, or
something else?

A friend of mine claims that you should divide your net worth equally
into three parts: (1) stocks, (2) bonds, and (3) precious metals. By
doing this you protect yourself in all outcomes. Stocks do well during
inflation, bonds do well during deflation, and precious metals do well
during stagflation.

Is this good advice?