Regular readers know we believe that despite the latest data, inflation fears are largely overblown. Our friends over at Stansberry Research aren’t so sure… and they’ve assembled an “inflation proof” portfolio of stocks just in case. Read on for the full story…
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You could parse the nitty-gritty of the latest inflation data and find arguments for and against the idea of inflation already peaking. But being “right” about this doesn’t really matter anyway…
If you have money in stocks and bonds, what matters is what Mr. Market thinks…
And, to that point, Mr. Market has been listening to the U.S. Federal Reserve, since the Fed is the biggest string-puller in the inflation game. With interest-rate hikes and other policies, it ‒ and it alone ‒ can take juice out of the financial system… or put it back in.
But one of its two mandates from Congress is to maintain stable prices in the U.S… We don’t have those right now… and it’s now becoming a political liability.
The concern on Wall Street – and a big reason why so many stocks have been falling in price the last several months – is that the Fed might do too much to try to ease inflation, with multiple, relatively large rate hikes… and while economic growth in general is slowing.
To us, this fear is warranted… A bad and entirely plausible scenario is that the Fed could hike rates, trim its balance sheet, and we could still have high inflation… Even Fed chair Jerome Powell admitted this recently, though not in so few words.
In a recent testimony before Congress, Powell admitted the central bank itself is not sure what will happen with the course of inflation over the next six months…
He also said the pandemic and supply-and-demand imbalances are the biggest drivers of inflation, not policy, and that things like the semiconductor shortage could extend well into 2023… So we ask, why then would policy changes help now?
They probably won’t… And if they do, they won’t make any significant difference for months. On balance, then we are just looking at a world with above-average inflation and higher interest rates.
In other words, things could still get worse before they get better. If I’ve learned anything working at Stansberry Research, it’s that trends can go on longer than you might think… and right now the inflation trend is in full force.
Even if what we’re saying is wrong, at the very least this is one of those times where you want to hope for the best… but prepare for the worst.
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Let’s step back a moment…
Even if inflation does slow down somewhat, the numbers the Fed looks at are still rising at historically high levels, as in recent CPI figures.
Things are not going to go “back to normal” overnight, or even anytime soon… and certainly not any faster than the trillions of dollars that have been printed into existence over the last two years will disappear from the system.
In other words, this is going to take a while… Some people like keen market observer Lyn Alden think we’re in for a decade of high inflation.
It’s wise to prepare for inflation – and higher inflation than the country has seen in decades. That’s the unfortunate truth that the powers that be won’t tell you.
So, like this time last year, when we told Stansberry readers to prepare for inflation in 2021, we’ll say the same for 2022…
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At least part of your portfolio should specifically protect you from inflation…
If not, at the very least it’s wise to spend a little time thinking about how inflation could influence your portfolio holdings… Companies that can afford to raise prices and keep making wads of profits are well positioned in this environment.
But if you want to “do more” right now… or simply feel you want more guidance on how to fight inflation… we have another option for you… One that you could apply to a portion of your portfolio in less than 30 minutes.
If this sounds interesting, our colleague Dan Ferris has the plan for the next step you should take…
Dan recently devised “The 10-Stock Inflation-Protection Portfolio.” He talks about it in a new interview with Stansberry’s editor-at-large, Daniela Cambone.
You can watch it here to get more details.
Dan’s newly created model portfolio is designed specifically to protect any investor’s holdings against the nasty effects of inflation eating away at your nest egg or shrinking your hard-earned savings.
He is warning that if you are expecting the “same old” stock market returns over the next decade, think again… Right now, stock valuations are so high that Dan says the math doesn’t add up for taking on more risk… especially with the scourge of inflation on the table.
As Dan told Daniela in the interview, he’s seeing a 10% upside in stocks in general right now… and as much as a 90% downside.
With this in mind, Dan came up with a hand-picked group of 10 stocks that will not only help protect your portfolio in a massive stock market crash, but will benefit from inflation sticking around in the months or years ahead…
Some are traditional inflation plays like gold stocks, including Dan’s No. 1 recommendation of the last four years, but many of these recommendations are new… or are ideas that other financial analysts are not writing about.
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As Dan recently wrote about the 10-pack of stocks…
I’ve included four infrastructure-related stocks that serve industries like power generation, road construction, energy, and homebuilding… They’re also essential pieces of modern life, without which we simply cannot maintain a high standard of living.
Finally, I’ve included a business that is like a royalty on the commercial-insurance industry… Most people don’t think of insurance stocks when they think of inflation protection, but it makes sense.
Hard assets like real estate, factories, and product inventories all have to be insured. As their replacement cost rises, so do the premiums required to keep them covered… Whether there’s a bear market or not, this company’s clients still need insurance… Once again, it’s selling an essential component of modern living.
Even if Dan is off the mark about the situation we’re in, at worst, you can be found guilty of being too conservative in your risk-taking, protecting your portfolio from rising prices, and investing in “essential” companies that will likely reward shareholders.
There are worse things you could do…
Once you see and understand this plan, it shouldn’t take more than a few minutes to put into action.
If you are interested in learning more and getting access to Dan’s exclusive inflation-protection plan, click here to listen to or watch his interview with Daniela right now.
Just for tuning in, you’ll hear the name of one stock Dan is recommending right now – for free.