Investor Alert
Mark Hulbert

Mark Hulbert Archives | Email alerts

Jan. 3, 2012, 12:02 a.m. EST

Winning the inflation battle but losing the war

Commentary: Inflation worsened in 2011 — but inflation hedges didn’t pay

Watchlist Relevance

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Vanguard High-Yield Corporate Fund;Investor (VWEHX)
  • X
    Vanguard Short-Term Investment-Grade Fund;Investor (VFSTX)
  • X
    Fidelity Select Natural Gas Portfolio (FSNGX)

or Cancel Already have a watchlist? Log In

By Mark Hulbert, MarketWatch

CHAPEL HILL, N.C. (MarketWatch) — Winning the battle but losing the war?

One year ago in this space, I reported that the top performing advisers were predicting that inflation in 2011 would emerge victorious in its epic battle with deflation. (Read my column in the January 2011 edition of Trading Strategies, entitled “Betting on inflation.”)

They would appear to have been at least partially right. A year ago, the Consumer Price Index’s 12-month rate of change stood at just 1.1%. The comparable rate today is 3.4%, three times greater.


Primary concerns
Sorting the winners from the losers on January's investment ballot.

Hulbert: January has a surprise in store
Neiman: Elections and elected will move stocks
Springer: 2012 brings more politics, more debt
Morales & Kacher: What is gold telling us?
Inflation hedges don't always pay off
Lowell: There's no place like home

Gold, Commodities Poised to Rise
Michael Cuggino, manager of the Permanent Portfolio Fund, tells Jonathan Burton that investors in 2012 will boost prices of gold, copper and other commodities.
/conga/story/2012/01/trading-strategies.html 184986

Nevertheless, if this was a victory, it has to be considered a Pyrrhic one: The three mutual funds that this group of top performers found popular a year ago have each lost ground. Two of the three were gold funds and the third was a bet on higher Treasury bond yields. This latter one in particular was a big loser, losing nearly 30% of its value during 2011.

What are these top performers recommending today? To find out, I constructed a subset of those advisers on the Hulbert Financial Digest’s monitored list who today satisfy the same criteria I used a year ago: Having beaten a buy-and-hold strategy in the stock market over the last decade, and as well among the top 25% for performance over the last 12 months.

The list of mutual funds that these top performers currently like is far different than a year ago. Today there are no gold funds, nor any direct bets on higher Treasury yields. Note carefully, however, that they aren’t betting on outright deflation, either—at least in any aggressive way: The bond funds that they currently like have relatively short durations.

Indeed, it would appear that, unlike a year ago, they are hedging their bets.

The funds are listed in descending order of their popularity among the group of top performers that I constructed:

—Vanguard High Yield Corporate /zigman2/quotes/201549316/realtime VWEHX +0.19%  

—Vanguard Short Term Investment Grade /zigman2/quotes/200545654/realtime VFSTX -0.10%  

—Fidelity Select Natural Gas /zigman2/quotes/201887980/realtime FSNGX -4.26%  

—Vanguard Intermediate Term Investment Grade /zigman2/quotes/201002642/realtime VFICX -0.12%  

—Vanguard Inflation Protected Securities /zigman2/quotes/207983017/realtime VIPSX -0.16%  

Click here to learn more about the Hulbert Financial Digest.

US : U.S.: Nasdaq
$ 5.31
+0.01 +0.19%
Volume: 0.00
Jan. 27, 2023
US : U.S.: Nasdaq
$ 10.07
-0.01 -0.10%
Volume: 0.00
Jan. 27, 2023
US : U.S.: Nasdaq
$ 15.52
-0.69 -4.26%
Volume: 0.00
Nov. 19, 2021
US : U.S.: Nasdaq
$ 8.61
-0.01 -0.12%
Volume: 0.00
Jan. 27, 2023
US : U.S.: Nasdaq
$ 12.11
-0.02 -0.16%
Volume: 0.00
Jan. 27, 2023

Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.

This Story has 0 Comments
Be the first to comment
More News In

Story Conversation

Commenting FAQs »

Partner Center

About Mark Hulbert

RSS News feed

Mark Hulbert is editor of the Hulbert Financial Digest, which since 1980 has been tracking the performance of hundreds of investment advisors. The HFD...

Mark Hulbert is editor of the Hulbert Financial Digest, which since 1980 has been tracking the performance of hundreds of investment advisors. The HFD became a service of MarketWatch in April 2002. In addition to being a Senior Columnist for MarketWatch, Hulbert writes a monthly column for Barron’s.com and a column on investment strategies for the Journal of the American Association of Individual Investors. A frequent guest on television and radio shows, you may have seen Hulbert on CNBC, Wall Street Week, or ABC’s World News This Morning. Most recently, Dow Jones and MarketWatch launched a new weekly newsletter based on Hulbert's research, entitled Hulbert on Markets: What’s Working Now.

More from Mark Hulbert

  1. This little-known indicator is bullish for 2023
  2. Welcome to Purgatory on Wall Street
  3. Think you know where interest rates are headed? Here’s some advice
  4. Why the unexpectedly weak Leading Economic Indicators might be good news
  5. The surprising message of the junk bond spread
Link to MarketWatch's Slice.