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Once Again, Cash Is King

NEW YORK ( TheStreet) -- Headline news last week read there's a run on Greek banks going on and eurozone chaos. As an adviser, I see a classic Greek tragedy, but I also see opportunity. We'll get to the opportunities, but first I want to discuss the fallout from the tragedy.

In a word, it's this: inflation.

Call it what you will, stimulus, quantitative easing, monetary policy, but to me it's all the same: printing money. It's happening in the U.S., and it's happening in Europe. Historically, printing money leads to inflation.

Inflation is to savers what kryptonite is to Superman. It's even worse in a low-yield environment, such as the one we are faced with. High inflation and low yields often result in negative returns when measured by purchasing power.

For example, someone heading into retirement with $1 million earning 4% may be doing OK. If they are facing 3.5% annual inflation however, their purchasing power will be cut in half over the ensuing 20 years. At 5% inflation, the damage to their purchasing power is devastating.

Further, investors want to know when inflation will materialize. My answer: usually when you least expect it.

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The opportunity is to put together what I call a global cash-flow strategy. Despite what's happening in Greece, Europe and domestically, there are still great opportunities all around the world, in real asset companies, with real cash flow, that pay investors dividends and over time, increase these dividends. This is hardly a new story; it has been in the news a lot lately. But smart investors will take it to the next level and seek out lesser known U.S. and foreign companies.

Now is the time to start doing your homework by creating a wish list and starting to accumulate some of these assets. By doing so, you are likely to increase the cash flow from your investments, and hedge yourself against the inflation that can erode your purchasing power. To me that's the ultimate success story for Baby Boomers in their retirement years.
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