Deflation or inflation is the question

Today on Bloomberg, there is an article talking about the 36 South Investment Managers Ltd., whose Black Swan Fund gained 234 percent in 2008, is raising money for a new hedge fund, betting that government efforts to pump money into economies could result in hyperinflation.

"Black swan" alludes to the once-widespread belief that all swans are white -- proved false when European explorers found black swans in Australia. A black-swan event is something extreme and highly unexpected.

U.S. President Barack Obama is selling record amounts of debt to try to end the steepest U.S. recession in 50 years, while Japanese Prime Minister Taro Aso has unveiled three stimulus packages worth 25 trillion yen ($261 billion) since taking office in September. Governments around the world selling record amounts of debt may devalue currencies against assets and spark inflation.




Time to think about inflation play?

In the classic investment cycle different types of industry rotate in and out of fashion as the economic cycle progresses, in response to the various stages the profits of each kind of company are most likely to outperform.

Here is a inflation/deflation timing strategy I have developed to help users maximise returns by exploiting this industry rotational phenomenon.