Is there any way to trade (gulp!) deflation?

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Strategists around Wall Street are beginning to worry about what was once unthinkable when the Federal Reserve embarked on its post-crisis balance sheet expansion: deflation.

The collapse in oil prices and strong dollar are seeping into more and more parts of the economy, cutting prices for goods and keeping wages stagnant.

Investors have little history to go on and not many Wall Street recommendations in the face of the deflationary beast. But some are giving it a shot anyway…

"Deflation, which has plagued Japan and is spreading to Europe, threatens the U.S, " wrote Jonathan Glionna, U.S. equity strategist at Barclays, in a report this week. "Equity investors are correct to worry about deflation because it can have severe negative consequences for stock prices. Deflation causes consumers and businesses to delay purchases because they develop expectations that prices will be lower in the future. Plus debt becomes more difficult to repay."

Barclays, which notes that its economists predict a fall in the consumer price index for 2015, believes the health-care sector, where prices keep going higher, may be the one sector to invest in and buck this trend.

Health-care stocks in the S&P 500 are investable as a group through the Health Care SPDR ETF.

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JPMorgan recommends going "long duration" in bond portfolios, and betting against commodities as well as short positions in the euro and yen in the face of the global deflation risk.

"In deflation, policymakers lose control over real interest rates and real wages, given downside rigidities in nominal rates and wages," wrote Jan Loeys, head of global asset allocation at the bank. "Deflation is like quicksand: once you are in, it is hard to get out and any movement may make things worse."

The best examples of long-term deflation hitting a developed economy are Japan in the late 1990s and the U.S. during the 1930s and late 1800s, according to Barclays.

All periods were very bad for equities. In Japan, the Nikkei 225 was cut in half over the decade starting in 1995.

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The U.S. will get an update on the rate of inflation Monday when the personal consumption expenditures index is released. It's expected to show prices paid by households declined by 0.2 percent in December, according to FactSet.

Households sure are paying more for health care however.

Barclays points out that December's CPI report showed a 5 percent annual increase in medical care and services.

"We are changing our recommendation on the health-care sector to market weight from underweight. This change reflects the sector's deflation protection and the strength of earnings, particularly from the biotech industry," stated the Barclays report.

To be sure, before one moves their whole portfolio into health-care stocks, consider that a truly deflationary environment is still looked upon by many strategists as a long-shot scenario.

Said Raymond James' Jeff Saut: "Deflation has (been), and is a bad bet. It only occurred in the Great Depression."