5 Potential Investing Blunders

Get FREE stock picks every week!

Investing Mistake #4: Betting heavily on runaway inflation via gold or Swiss francs.

When you think about it, it’s kind of loony that people are fretting about runaway
inflation right now. Consumer prices over the past year have fallen for the first time since 1955.

I agree that the Fed’s bailout operations could lead to inflation down the road, but that’s an issue for 2010 and beyond, not
today. It’s going to take a surprisingly long time for the government’s bailout efforts to rev up the economy enough to stimulate
inflation.

We just aren’t going to swing overnight from a deflationary recession to an inflationary boom. Indeed, there’s little evidence
that business activity, here or in any other industrialized country, has truly bottomed yet. Investors who are buying gold as hedge
against hyperinflation are a couple of years early, at least.

Even now, I think you should be buying ETFs.html">oil-related
investments on pullbacks, because the long-term supply/demand picture is very bullish for “black gold.” Yellow gold can probably
wait a while longer. If anything, I would be looking for a chance to short gold and other inflation hedges should they climb
further.

NEXT: Not knowing when to move on