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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: flyboy who wrote (53628)1/3/2001 8:17:09 PM
From: sea_biscuit  Read Replies (1) of 436258
 
Deflation is ALWAYS much more dangerous that inflation for any economy

Agreed. Moreover, inflation may even be NECESSARY to get out of this mess. People and corporations have borrowed so much that the only way they will be able to repay is with inflated dollars.

Given that inflation is the most likely scenario into the future (with occasional scares of deflation thrown in), we have to set up portfolios of inflation beaters. Franchises like BRKB, KO, G, MRK, PFE (and to a much lesser extent, technology franchises like CSCO, MSFT, SUNW) look promising. However, your investment returns depends on the price you paid -- the higher you pay, the lower your returns.

One should also think of small-cap stocks (especially something like the S&P Smallcap 600 value index), since small companies are the ones that have the ability to increase their earnings faster than the rate of inflation.
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