The actions that our government is taking today will have consequences. The U.S. Treasury is printing money with wild abandon, and while they are doing what they must to prevent an economic catastrophe, that doesn't mean it won't come at a cost. It's a near certainty that future inflation looms.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Time Will Tell
To be sure, the world economy is still doing a lot of deleveraging and the U.S. consumer is going to be frugal for some time. After watching their home and other assets continue to decline in recent years, U.S. consumers aren't going to be as quick to spend as they used to. Nonetheless, the massive printing of the dollar will likely lead the currency downward which creates inflation. In inflationary environments the best stocks to own are those with pricing power, like commodity based stocks.

SEE: All About Inflation

Don't Let Cash Burn You
While sitting in cash can feel nice, there's nothing worse than being duped by inflation. It's cash's worst enemy because it crushes the value of your cash without you realizing it. Instead, consider quality commodity-based businesses.

Commodity Choices
Teck Resources (NYSE:TCK) is a good diversified play. This Canadian giant produces a wide array of commodities including zinc, coal, copper and gold. A lot of times, one commodity is selling near a high (like gold today) while other might not, and Teck can use this to its advantage in volatile times. It trades at a P/E of 7.6.

Mosaic (NYSE:MOS) is a solid play on the fertilizer turnaround. No commodity, in my opinion, will be needed more on this planet than fertilizer. The world's supply of arable land is shrinking against an increasing population. The result is more crops per acre and that can be done only through the use of fertilizer. At a P/E of 10.2 you're buying a blue chip quality business for a fraction of a blue chip price.

Investors who want to spread their assets directly into commodities can take a look at the PowerShares DB Agriculture ETF (ARCA:DBA) which actually holds agriculture commodities like wheat, sugar, and soybeans. Or for commodities, the PowerShares DB Commodity Index (ARCA:DBC) holds oil, gold and corn futures.

The Bottom Line

The best time to buy any quality asset is when the price is temporarily depressed. They can be a nice asset to own if inflation rears its ugly head.

Related Articles
  1. Chart Advisor

    Now Could Be The Time To Buy IPOs

    There has been lots of hype around the IPO market lately. We'll take a look at whether now is the time to buy.
  2. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  3. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  4. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  5. Mutual Funds & ETFs

    Buying Vanguard Mutual Funds Vs. ETFs

    Learn about the differences between Vanguard's mutual fund and ETF products, and discover which may be more appropriate for investors.
  6. Mutual Funds & ETFs

    ETFs Vs. Mutual Funds: Choosing For Your Retirement

    Learn about the difference between using mutual funds versus ETFs for retirement, including which investment strategies and goals are best served by each.
  7. Mutual Funds & ETFs

    How to Reinvest Dividends from ETFs

    Learn about reinvesting ETF dividends, including the benefits and drawbacks of dividend reinvestment plans (DRIPs) and manual reinvestment.
  8. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  9. Mutual Funds & ETFs

    Best 3 Vanguard Funds that Track the Top 500 Companies

    Discover the three Vanguard funds tracking the S&P 500 Index, and learn about the characteristics and historical statistics of these funds.
  10. Forex Fundamentals

    How to Buy Chinese Yuan

    Discover the different options that are available to investors who want to obtain exposure to the Chinese yuan, including ETFs and ETNs.
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>

You May Also Like

Trading Center