America's slow recovery is gaining momentum, unemployment is declining and there are even signs that inflation will start to pick up. And while it will be years before consumers and the federal government fully repair their broken balance sheets, housing prices recover and the majority of the unemployed get back to work, for the first time since 2007, the financial landscape is no longer defined primarily in terms of the crisis. The economy is moving forward.
As all economic transitions do, this moment of change is creating new possibilities in the financial markets. As the landscape shifts again, it's important that investors understand where these opportunities are and where they can put their money. Here are 11 areas experts think you should consider right now:
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1. CommoditiesAs the global economic recovery accelerates, fears of deflation have been replaced with concerns about inflation. The prices of commodities and raw materials such as gold, oil and agricultural products have been rising for some time, but businesses have largely been unable to pass those higher costs along to consumers. That may change. While few experts believe inflation is likely to be a major problem, it can't be ignored. "We are not big inflation bears right now, but that is not the point," says Seth Masters, chief investment officer for blend and defined contribution strategies at asset manager AllianceBernstein. "Even if there's only a 10% or 20% chance that inflation becomes serious, that is a big problem for investors. It will be bad for stocks and very bad for bonds, so it makes sense to have some protection against inflation, even if that is not the central case," he warns. Real assets such as commodities can provide protection in an inflationary environment, says Kristi Mitchem, a senior managing director at asset manager State Street Global Advisers. Rather than looking for the next hot commodity, invest in a broad range of commodities by tapping a mutual fund or an exchange-traded fund. "Investors should be well-diversified in commodities," says Mitchem.
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