Mitch Tuchman
- http://www.marketriders.com

With ever growing uncertainty whether our economy will face inflation or deflation in the months to come given recent government spending, what is certain is that no one wants to see their fixed income lose purchasing power. Unlike most bonds that pay out a fixed dollar amount in interest, treasury inflation protected bonds (TIPs) pay out a fixed amount over the consumer-price index (CPI), making them a popular choice for investor anticipating the economy to experience inflation. If inflation is higher than projected, the government adds to your principal on a TIP and makes up the difference!

Not only does owning TIPs allow one to keep up with monthly bills that are increasing in step with inflation, they are an important asset class to consider when determining an asset allocation strategy. TIPs enable one to further diversify a portfolio. Bonds are ideal for those not able to stomach much risk and TIPs in particular protect one's fixed income from eroding.

One of the most valuable commodities in the world is water -- without it, mankind can't survive. While more than 70% of the Earth's surface is covered by water, but 97% of it is saltwater and only 1% of the remaining 3% is readily available for consumption. Water is becoming scarce, and upcoming water shortages are emerging as the population of the world increases, particularly in emerging markets like China, India, and Mexico.

A great way to include water as part of your portfolio's commodity allocation is by buying an exchange-traded fund (ETF). An ETF is a basket of stocks that allow you to invest in a single asset class, sector, country, or theme with one stock. In one ETF, you'll own not only water utility companies but also related businesses, like those that help build the infrastructure for making water suitable for drinking. You won't have to pick a single stock, rather you can own the most important stocks in the water industry -- worldwide. ETFs are perfect building blocks for building a diversified portfolio using an asset allocation strategy.

As you read stories about victims of the Madoff fraud, aren't you glad that you weren't one of them? Why are you so sure that it will never happen to you? How do you know its not happening to you now?

In academic financial research, there's a concept called "agency risk." Agency risk occurs when someone who is acting as your agent has a set of interests that conflict with yours. In investing, agency risk is rampant because one party can often gain from an action that will cause a loss to the investor without the investor even knowing it! Bernie Madoff was an agent of the investors who hired him to manage their money and he was crooked for years until his scheme ended. But investors face plenty of legal, yet sometimes equally dangerous forms of agency risk. It is important to understand them and find ways to mitigate these risks.

With President Obama at the helm it seems as though the light might be shining on the economic horizon. If you're of this opinion then now might be a good time to invest some of your hard earned savings in the banking industry.

But what banking firm do you decide to go with? Rather than selecting just one bank, how about hedging your bets by investing in many diverse banks from all over the country? An exchange traded fund (ETF) is a great way to do just that. By investing in the ETF PowerShares Dynamic Banking (PJB) you get shares of several different banks. PJB seeks to replicate the Dynamic Banking Intellidex index and invests at least 90% of assets in common stocks that comprise that index. Among their holdings in the PJB ETF are BancFirst Corporation(NASDAQ GS: BANF) BancFirst's holding company, Capital Federal Financial(NASDAQ GS: CFFN) the holding company for Capitol Federal Savings Bank, and Northern Trust Corporation(NASDAQ GS: NTRS) Northern Trust Company's holding company.

The old adage to new investors has always been to invest in something that you use or believe in. Right now, you're probably reading this online and there's a good chance you got online through a broadband connection, so why not invest in the companies that continue to supply equipment for the growth of the broadband revolution?

The exchange-traded fund (ETF) Broadband HOLDRs (NYSE: BDH) is a great way to invest in the broadband industry without having to select one company. BDH consists of about 22 companies that develop, manufacture and market products and services that facilitate the transmission of data, video and voice more quickly and efficiently than traditional telephone line communications.

One of the buzzwords that is currently in vogue in the investment community is biotechnology. This is a broad-based field that covers technological applications in any biological system, meaning humans, animals, agriculture, and medicines. This is a booming science and the investment field offers many opportunities for wealth accumulation.

If you don't want to spend countless hours trying to understand not just financials, but scientific and technical jargon that biotech companies harbor, exchange-traded funds (ETFs) may be the better choice for investing in the biotechnology industry.

An ETF is similar to buying a share of a company, but instead of getting one particular company you're investing in a bundle of companies within a particular field or specialty. It's a great way to invest in something you believe in while still hedging your bets and having a bit of diversity.

It's hard to decide where to place your investments these days with some of the traditional safe bets not feeling so safe. One thing is for certain, people will continue to need staple products, even if they're finding them more inexpensively or they're purchasing less of them.

Some staples that will always be in demand, no matter what the economic environment is, are food stock and beverages. If you'd like to find a way to invest in food and beverages, consider making a purchase of and exchange traded fund (ETF). Exchange traded funds are a collection of stocks bundled together so you are not purchasing one single company, but you're diversifying across a sector, thereby limiting your risk. And they are usually 80% less than a mutual fund that uses active management.

Word is that retailers will be having a very cold holiday season this year. In fact, MasterCard has noted that sales of apparel, shoes, and appliances dropped considerably in the first two weeks of November. Consumers are being a little thriftier when it comes to extras as they're worried about unemployment and the recent news of a financial crisis. But no matter what's going on in the economy, there are just things that people need, staple items.

An investment in staples means you're banking on something that people are always going to need and will always purchase, no matter what the economy forecast is. Consumer Staples Select Sector SPDR (NYSE: XLP) is an excellent way to invest in a variety of staples in one single investment purchase. This exchange traded fund (ETF) includes companies from food and drug retailing, beverages, household products and personal products. Items that are clearly essential to daily living.

With a single stock -- XLP you will get shares of such noted companies as the Coca Cola Co. (NYSE: KO), Colgate Palmolive (NYSE: CL), Kraft Foods Inc. (NYSE: KFT), PepsiCo Inc. (NYSE: PEP), Procter & Gamble Co. (NYSE: PG), and Wal-Mart Stores (NYSE: WMT). These are all well-known household names that will continue to be market leaders in any financial environment. If you want to invest in things that people need, XLP is a sound choice.