Friday, 3 June 2011

On becoming a rational investor (Part 6 of 9)

From this perspective, those phenomena are similar to the influenza virus that marks the arrival of winter every year. Exaggerated concern seldom improves anything. Instead, individuals should identify the path that minimizes trouble and, if possible, allows to profit from it.

Whenever you hear that inflation or deflation are coming, ask yourself how you can structure your finances in order to benefit from the situation.

Can you link your income to a product whose price is likely to increase or decrease at the same pace as the overall economy? Can you reduce the amount of cash that you require to live and invest the remainder in assets that will profit from upcoming economic changes?

To be continued in the next post.


[Image by Orbisnonsuficit under Creative Commons Attribution License. See the license terms under]