Commodities often offer investors strong returns during stagflation. That’s particularly true if stagflation is being caused by a disruption in the oil market as occurred in the 1970s. Companies producing commodities or providing services and equipment to the companies producing commodities should benefit. Investing in technology companies that produce software or robots that enhance corporate productivity should also perform well during stagflation. And in the past, defensive companies outperformed cyclical companies. Defensive companies often produce essential items like food and medicine. Consider buying Treasury Inflation Protected Securities (TIPS) because their principal value is indexed to the rate of inflation as measured by the Consumer Price Index (CPI). When inflation rises, the principal value of TIPS increases. Traditional Treasury notes have a fixed interest rate and principal amount.