What I do want to do is preserve my capital for when bonds are at 10+% in 6-10 years.
I want to maintain a steady course over the next few years, and I know that:
a) the dollar is going down
b) interest rates will be rising
c) the stock market will do whatever... probably go up to some extent because all the printed money has to go somewhere
d) taxes going up
e) inflation increasing
g) gold going up, but volatile nonetheless. Great for when you're young, but hard to deal with when you're older
h) twin deficits spiraling out of control
i) U.S. dollar losing status as reserve currency
...and so on.
All I want to do is to hold ground for the next two to five years,
I spent some time considering how to deal with a rising inflation and rising interest rate scenario earlier this year:
1. sell all bonds or similar (other than those listed in #2) with terms of longer than 2-3 years. I would prefer to keep short term bonds/CDs rather than cash (i) to get a bit more interest and (ii) to reduce the temptation to buy too early in the interest rate cycle
2. buy i-bonds (or similar) and (possibly) some longer term high rated non-callable corporate bonds with interest rates that either float or will float at some point in the future. With the latter, you need to be very careful with credit quality
3. buy real estate using long term fixed interest rates for investment purposes. Since real estate may take a short term hit as rising interest rates off set the inflation impact, keep the gearing conservative - ideally you want a cash surplus each month
4. buy hard assets like timber, farm land, collectables and bullion
5. buy commodities and commodities funds as an imperfect currency hedge - most commosities are priced in US$
6. pay off all floating rate debt
7. maximise tax efficiencies under current tax laws
8. invest offshore - look for countries with low debt to GDP ratios and favourable demographics
9. if you are going to surrender your US citizenship, do it sooner rather than later (the same with changing states in the US) - a difficult process may get harder going forward
10. consider investments which generate a return which is either tax sheltered or which generate part of their return without the need for realisation (e.g. real estate)
11. improve your skill set to maximise your chances of remaining employed or finding employment or generating some side income should the need arise
12. do what you can to keep your health. In these conditions the cost and availability of health care is likley to come under pressure. Prevention will be the best medicine
13. keep/develope a good social circle and low cost hobbies and interests - these are important in more ways than one
I've done some of these but am still sitting on the fence regarding inflation/deflation (or, more accurately, the timing).
Hope this helps.
Needless to say, I am not qualified to give investment advice.