Market analyst Robert Prechter isn’t so sure, though, writes Roshawn Watson for Watson Inc. Prechter feels that stocks are overvalued, raising the likelihood of a deflationary period.
What can you do?
The greatest asset to own during a deflationary period would be cash since anyone with cash on hand would preserve his or her purchasing power as other asset classes plummet. Other assets that may fare decently in deflationary times include:
- Short-term government bonds.
- Short ETFs – but use caution. These are not meant for buy-and-hold and must be used with care and understanding.
- Dividend ETFs.
For more information on inflation, visit our inflation category.
Max Chen contributed to this article.