Investing: Two-Sided TIPS

With rising prices on their minds, investors are flocking to inflation-protected Treasuries. Should you?

With wholesale prices rising briskly and consumer costs creeping up, investors are rushing to protect their money from inflation. This season's favorite hedge: Treasury inflation-protected securities, or TIPS, which do what their name suggests and provide great portfolio diversification to boot. The bad news is that investors have been clamoring for TIPS so enthusiastically that they have bid up prices, making TIPS less attractive for the time being.

Here's how TIPS work: principal and interest payments of TIPS, unlike ordinary Treasury bonds, are adjusted for inflation--when goods and services become more expensive and your dollar winds up buying less. Say...

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