It isn't a matter of "if" inflation will hit, it's a matter of "when" it hits, what assets should you own? During periods of inflation there will be extreme volatility and corporate profits will go down.

Last year, retail company profit margins were being eaten into by inflation, retailers could have passed the extra cost along to the consumer but instead chose to hold back on raising prices because of the fragile economy. Retailers, like Nike, has announced earlier this year that it will be raising prices for its products some time in the future due to higher oil and cotton prices. As an investor, you have to ask yourself if consumers are willing to spend more on things like a pair of shoes. If they don't; Nike shareholders will get hurt.



During times of high-unemployment and rising food and energy prices, I think consumers will wisely choose to save. But with the type of monetary policies enforced by the Fed, they're trying to force consumers to spend--which will hurt consumers as they spend their savings, and anybody who chooses to save will get hurt anyways because their purchasing power will diminish by the day. It's a lose-lose situation.

Lesson: Own commodities. They're not a screaming buy now, but if commodities correct from here, like I suspect; jump on.