Deflation investing?

[Architect]

All the investing books warn of the dangers of inflation and how to protect against it, but it's too bad none of them warn of the dangers of deflation and how to protect against that too. It would have helped a lot of people this year. For some reason the investing community relegated that to the tin foil hat corner, even though the evidence for it was everywhere.

Maybe it's instructive to review how its played out so far ...

1. Housing price deflation. Obvious one here - sell your house and rent, which was a great move in 2005. Housing is as much a financial decision as is investing.
2. Equity deflation. Own quality bonds - enough said.
3. Commodities deflation. It was wild to see everybody flipping over commodities last year - like they were the new undiscovered asset class. Commodities have always been far too volatile for you, me, hedgies, and institutional investors - what was different in 2007?
4. CPI deflation. This is the deflation everybody thinks of, which we're beginning to see now and could become more widespread.
5. Currency deflation. The strongest currency goes to the country with the highest productivity growth, traditionally the US which I expect to continue well into the future. One danger with overseas investing is you're not just playing with stocks, but currencies, and the buck bears have been slaughtered this last year.
6. Foreign equity deflation. It was also amusing to see everybody dogpile onto stocks everywhere else in the world, because when the downturn came it would trash those markets even worse than ours. The U.S. will probably be the best of a bad lot.

So how do you protect against deflation as an investor?

1. Stay out of debt. No news here for LBYM's investors ...
2. Own some Treasuries. The longer the better. Individual investors don't generally own the long bond, but sometimes it makes sense. Intermediate Treasuries won't kill you, and this year they've had a healthy return.
3. Be willing to give up potential gain to preserve capital. Tortoise vs hare kind of investing - would you rather be rich or retired? I'd rather have the retirement thank you, and give up the boat.
4. Never, ever believe that anything grows to the sky always and forever. Such as trees, skyscrapers, housing prices, college costs, medical costs, stock prices, inflation ...

Just a few thoughts, call me crazy, but maybe some people will find it helpful or amusing.