The 5 Most Dangerous Trends Facing Investors In 2012.

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Investors may have to face many dangerous investment scenarios in 2011. Inflation and maybe even hyperinflation may be a problem soon. The weakening U.S. dollar may also affect dollar-denominated investments. The European Union is still in the midst of having members potentially becoming insolvent and the U.S. cannot seem to solve its unemployment and deficit problems.

The Federal Reserve Bank says it will continue to implement its quantitative easing regimen. The continuous printing of U.S. dollars coupled with higher commodity prices will most likely lead to inflation or potentially hyperinflation by the end of 2011. This can become a self-fulfilling prophecy because each dollar is worth less and less and is chasing around a finite amount of available commodities which in turn pushes those prices even higher.

The Federal Reserve Bank has promised to keep interest rates low as long as possible to help stimulate the economy by making it so cheap to borrow money. The abundance of money being printed coupled with the low interest rate environment pushes international investors to currencies paying higher interest rates such as the Australian, New Zealand and Canadian dollars. This in turn pushes investors to sell U.S. dollars weakening the currency even more.

The P.I.I.G.S., which are Portugal, Italy, Ireland, Greece and Spain, are still struggling to stay solvent and may eventually tear the European Union apart. Talk that the strength of the region, Germany may become tired of bailing out the weaker countries and revert back to the Deutsche Mark may spell the demise of the Euro Currency.

The two major obstacles facing the U.S. economy are the huge deficit and the 8.5% unemployment rate. Neither of these problems seems to have an immediate solution. Companies are not hiring because of the uncertainties of future health care and tax liabilities. This trend may continue through 2011 and beyond.

During the crash of 2008, the real estate and the stock markets lost as much as 50% of their values over the following 12 months. Only two asset classes made money in 2008 and they were 30 year treasury bonds and managed futures. Managed futures are non-correlated to stocks, bonds and real estate and can lower a portfolio’s risk while at the same time increasing returns but most investors are unaware of this potentially portfolio saving asset class. Visit managed-futures-trading to learn more.

The author of this article is a 18 year veteran of the commodity markets and the president of T & K Futures and Options, Inc. Past performance is not indicative of future results. Futures, options and foreign exchange products carry significant risk of loss.