By 2 Cents on March 9th, 2011 | Category: Investing |  Patience and perseverance have a magical effect before which difficulties disappear and obstacles vanish.
~John Quincy Adams
Inflation has been in the headlines a lot lately. Many point to food price spikes as a key factor in the eruption of bloody protests in the Middle East and North Africa. Instability in these regions has only added to inflation concerns as it has caused the price of oil to surpass the psychologically important $100 per barrel mark.
I recently wrote about where Canadians should invest if inflation rises and I included Real Return Bonds (RRBs) as an option. These are inflation-protected bonds issued by the Canadian government. They are analogous to the Treasury Inflation Protected Securities (TIPS) issued by the U.S. Treasury.
If you follow the financial markets at all, you likely noticed that bond prices have taken quite a [...]
Read on and enjoy … Inflation Protection: Are Real Return Bonds or TIPS the Answer?
By 2 Cents on February 14th, 2011 | Category: Investing |  One bright day in the middle of night two dead boys rose to fight. Back to back they faced each other, drew their swords and shot one another. A deaf policeman heard the noise, and saved the lives of the two dead boys. If you don’t believe this lie is true, ask the blind man, he saw it too.
~Author Unknown
Update: This article was chosen for the Best of Money Carnival #91 posted at Intelligent Speculator. Thanks!
Are you confused about inflation yet? Everywhere you turn some analysts are worrying about rising commodity prices while others, including Fed Chairman Bernanke, point to the tame core inflation rate. Back in August of 2010, it looked like a double dip recession was in the cards and we were worrying about deflation. Then the Fed threw the stock market a QE2 bone and Read on and enjoy … Wake Up and Smell the Inflation
By 2 Cents on January 18th, 2011 | Category: Economics |  If inflation continues to soar, you’re going to have to work like a dog just to live like one.
~George Gobel
This is an excerpt of an article that was originally published yesterday as exclusive content on another site. You can read the whole thing on Seeking Alpha.
The Food Crisis of 2011 (Excerpt)
Our overview of 2011 What Ifs concentrated on the concepts of bifurcation and biflation. Those themes are already playing out just a couple of weeks into the New Year. Inflation in all types of commodities has ramped up even further, leaving countries like China, India, Brazil, Thailand and South Korea to deal with more than their fair share of these inflationary forces. Meanwhile, easy monetary policy in the U.S. and Europe just adds fuel to the inflation fire.
The [...]
Read on and enjoy … Why Are Commodity Prices Rising? Let Me Count the Ways
By 2 Cents on October 15th, 2010 | Category: Economics |  In my opinion, the crisis and the sharp recession of the past two years and the subsequent rescue packages around the globe did not provide the necessary catharsis that recessions need to bring to economies.
~ George Athanassakos
Update: This article was selected for the Best of Money Carnival #73 posted at Redeeming Riches. Thanks!
I chose a recent article from the Globe and Mail for today’s Friday Food for Thought. This one is by George Athanassakos, a professor of finance. He has been wondering about what the rise in both bonds and gold means for a couple of years now and provides some updated insights in this article: Who Is Right? Bond Bulls or Gold Bugs?
Usually a rising gold price indicates that investors see inflation coming. Rising bond prices, and the accompanying lower yields, usually portend slowing [...]
Read on and enjoy … Can Gold and Bonds Both Be Right?
By 2 Cents on September 20th, 2010 | Category: Economics |  There’s an alternative. There’s always a third way, and it’s not a combination of the other two ways. It’s a different way.
~David Carradine
Update: This article was included in the Carnival of Financial Planning #159 posted at The Skilled Investor. Thanks!
When I last wrote about inflation vs. deflation, I was trying to figure out which one would prevail and how best to position our money. At the time, I felt like we would likely see deflation first, with a bout of inflation down the road at some point. We could even see hyperinflation if global central banks devalue their fiat currencies in a race to the bottom. A couple of wise readers (Kevin from Invest It Wisely and Kevin from Out of Your Rut) pointed out that we are actually experiencing both inflation and deflation, but [...]
Read on and enjoy … Are You Ready for Biflation?
By 2 Cents on July 30th, 2010 | Category: Investing | A nickel ain’t worth a dime anymore.
~ Yogi Berra
Update: This article was chosen for the Best of Money Carnival, #Sexty-Two at Budgets Are Sexy. Thanks! It was also included in the first ever Carnival of Wealth posted at Personal Dividends. Thank you!
When we looked at the current pros and cons of investing in commodities and real estate, it became quite apparent that there are some pretty good arguments on both sides of the debate. We often hear contradictory truisms. Cash is trash. Cash is king. Which is it?
The correct answer is likely “it depends”. There are times when it’s prudent to hold more cash, and there are times when it makes sense to move more money into riskier assets like the ones we’ve been discussing this week. Today, we’ll take a look at the case for each and [...]
Read on and enjoy … Cash: Is It Trash or King?
By 2 Cents on June 30th, 2010 | Category: Investing | It’s better to stir up a question without deciding it, than to decide it without stirring it up.
~ Joseph Joubert
Update: This article was included in the Carnival of Financial Planning #150 posted at Military Finance. Thank you!
I’m going to try to raise some of the key issues that might affect interest rates over the second half of 2010 and beyond. Like most of the economic and market analysis we undertake here, these will just be the observations of an interested amateur. They are designed to be food for thought, and not definitive investing advice.
Interest Rate Drivers
On Monday we looked at inflation and deflation. Getting the call on that debate right will likely determine the relative success of any portfolio over the next decade or so. It will also have a profound effect on interest rates. [...]
Read on and enjoy … Interest Rates: 2010 Mid-Year Review
By 2 Cents on June 28th, 2010 | Category: Economics | Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair.
~ Sam Ewing
Will we have inflation or deflation? This is probably the most important question facing investors right now. There are plenty of smart people who argue convincingly for each. All of them make very good points. But who is right? If you asked me if we should be worried about inflation or deflation, I would probably answer as follows: Yes.
Inflation & Deflation Defined
You know you’re going to have a hard time answering a question correctly when the experts can’t even agree on the basic definition of the terms of the problem. Not only is there a huge and varied debate in the financial community about whether inflation, deflation, both, or neither is a threat, many [...]
Read on and enjoy … Inflation or Deflation: Which Is It?
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