Stagflation

Investopedia.com calls stagflation "a condition of slow economic growth and relatively high unemployment - a time of stagnation - accompanied by a rise in prices, or inflation."

Right now, we are looking at a possible scenario in which the economy slows dramatically and, as a double whammy, inflation runs higher than normal. The average fixed-income investment won't keep up with the higher inflation rate, and most stocks will drop in value because of the slower economy.

So how do you invest during a period of stagflation? Very carefully.

During periods of high inflation, natural-resource investing is one of the best ways to outperform the market. Gold, uranium, silver, and other natural resources tend to move higher.