Unprofitable deflation can cause a prolonged recession. Invest in Treasury bonds and interest-rate sensitive stocks, with low exposure to credit risk if possible. Populations will age significantly in Japan, Germany, and the United States over the next two decades. Expect more pressure on politicians in aging nations to cut tax rates, to boost savings incentives, and to encourage equity investments. Invest in asset management companies and, of course, health care providers.
Populations remain relatively young in most of Asia, Latin America, and the Middle East.
Invest in outsource manufacturing in emerging markets and also in consumer electronics suppliers. Competitive pressures will force many companies to acquire or merge with competitors globally. Eventually, this may revive inflation. But, over the next several years, that's not likely. Consolidation means more rounds of restructuring, and job insecurity.