Making Money on Food & Energy Inflation: Pros

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With prices of food and energy-related commoditiessurging, this is a chance for investors to profit, said Keith Springer, president of Springer Financial Advisors, and David Kelly, chief market strategist at JPMorgan Funds.

“Rising global growth [will] push up food and energy prices…I have a generally positive outlook in terms of commodities as an investment area,” Kelly told CNBC.

On the consumer front, however, Kelly said he is concerned that the rising prices are not necessarily translating into higher wages. “The latest wage reading year over year is the lowest since 2004,” he noted.

However, he added, “If you don’t get that wage increase, you won’t get a general inflation problem in the U.S.”

Springer's Caveat:

In the meantime, Springer said average investors need to be cautious when investing in commodities, because the sector is generally played by “very savvy commodity investors for the short-term.”

“You’ve got to be careful, because the Fed is trying to induce some inflation—they can’t create asset inflation, so with QE (Quantitative Easing), they are doing their best to form some sort of inflation and they’re not going to stop until we have some,” he said.

Recommendations:

Kelly Likes:

S&P Technology

S&P Consumer Discretionary

Springer Likes:

Power Shares DB Commodity

Deere

Direxion Energy Bull 3X

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Scorecard—What They Said:

• Kelly's Previous Appearance on CNBC (Dec. 30, 2010)
• Springer's Previous Appearance on CNBC (Dec. 31, 2010)

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More Market Analysis and Advice:

• Doug Kass: Commodities Look 'Very Attractive' Now
• How to Invest in Rising Commodities: Stock Picker
• 'Fast Money' Traders: Commodity Correction Completed?

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• Best Investments of 2010

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Disclosures:

No immediate information was available for Kelly or Springer.

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Disclaimer