Investing during deflation or inflation

This was posted as a comment on an article in The Economist of December 3, 2011 on hedge funds.


For an investor I think this is a key sentence in this article:

“Some fund managers privately confess that they wish they could move entirely into cash and sit out the market turmoil.”

During a time of deflation the best investment strategy is to hold assets in cash.

However, with the kind of uncertainty we are currently experiencing one should not rule out the possibility of a sharp switch to inflation.

Probably the best investment at this time would be a market garden – then regardless of what happens one should be able to eat.  And check the quality of the soil.  Some people fear a lot agricultural land has been degraded beyond repair.

(The author of this comment has a web log on economics at

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