Price your investment in real money.

One of the most important function of money is that it facilitate economic calculation by carrying out the "real price" of goods and services between market participants. Price is therefore information for it communicate to the individuals and corporation the necessary valuation that will enable them to anticipate present and future actions.
 Inflation destroys this information flow by distorting the real value of goods and service into the economy. Since money flows gradually from one sector to the economy to another, inflation " deceive" people into investing or spending on the bases of such price distortion. This is the case for equities under our current fractional reserve monetary establishment.
 The recent crack up boom in equity has been caused by the Fed stimuli and QE2, raising the price of the different American indexes as much as the price of every daily commodity. When the Fed engage in asset purchase, it transfer its liquidity into the banking system which enable corporations and investment funds to borrow a very low rate in order to purchase equities. The hot money that flows directly from the Fed causes the stock market to overhype, which is always seen as a good thing on Wall Street. Rising equity is then promoted a sign of economic recovery by analysts, even if the underlying health of the different corporations is very far from being rosy.

One way to tell if the equities are rising on the base of underlying fundamentals is to price them in terms of real commodities like gold or silver. Commodities represent the basic goods that are used everyday in our economies, and their prices movement often signal the true health of the economy. Contrary to what is accepted in the mainstream, rising commodity price do not denote economic health but inflation instead. Increase in standard of living is materialized by higher purchasing power, not the other way around.
Buy measuring the stock indexes in terms of gold and silver, one can get a " fundamental outlook" of its value in real money.
More often than not, rising equities in dollar term might actually be inflation adjusted losses due to the fall in purchasing power of the currency. People, are always attracted by rising price and monetary inflation fulfill that need for the Wall Street machine. But, ignoring the total pricing of those assets within the economy as a whole is a sucker's bet that always end in tragedy.

By being able to ignore the crowd, a smart investor can simplify his strategy while always increasing his return by simply protecting his capital from inflation; or at best, invest his money in assets that rise well beyond the rate of inflation.