Because inflation hasn't afflicted
What do we recommend? We respect many of those who advocate gold, but, like Ackman and Robertson, we believe it's too difficult to assign a value to the metal. Instead, we prefer high-quality companies with significant foreign exposure and the ability to raise prices. Both Microsoft and Pfizer recently reported better-than-expected earnings that signal the resiliency of each company's business. In Microsoft's case, those results don't yet reflect the launch of its Windows 7 operating system, which we think will result in much better profits than analysts expect.
You can also hedge against rising inflation by investing in businesses tied to natural resources, from crude oil to agricultural commodities. One favorite in this category is Contango Oil & Gas, which explores for energy mostly in the
More adventurous investors who think that higher inflation will lead to higher interest rates can bet against long-term U.S. Treasury securities through options and various exchange-traded funds (bond prices generally fall when rates rise). For example, we've shorted iShares Barclays 20+ Year Treasury Bond ETF, which is designed to gain value when yields fall and Treasury-bond prices rise. If inflation rises rapidly and rates follow suit, Treasury bonds will perform poorly.
Related previous post: Warren Buffett’s Comments on Inflation