facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause

What Can I Do to Hedge Inflation?

Full Transcript:

Hello, welcome to Arista Advice. Question of the week is: "Paul, I'm worried about inflation. What can I do to hedge inflation?" Well, the media has a lot of people wound up about this inflation word right now, and I would say they're overwound up. 

What we did is we went and looked back as I'll share with you right now, three different time periods of high inflation periods in US history. The first is from 1973 to 1979, 1980 to 1984, 1988 to 1991, and we analyzed and looked at the data and the academic evidence over those three time periods where we had high inflation. Inflation periods went anywhere from 2 to almost 10%, and we're seeing the same pattern that we've seen in times past. Now some say the Democrats have been printing money, oil price's down, inventory is high, COVID. I'm here to say it's all the same stuff, but let's look at the numbers.

The US inflation has climbed 5% over the last year, the largest 12-month increase since August of 2008. Remember year to date, the average inflation is still sitting at 2.5%, all within the right strike zone that the Federal Reserve is managing. We all need to have inflation. Inflation is good. Too much inflation is bad, but let's settle down folks and be calm and go about our normal lives instead of getting all wound up. We believe in being informed and prepared in regard to short-term inflation. A lot of investors are wondering how to position their portfolios. 

Take a look at this chart going back the last 10 years with inflation and how other asset classes have done. As you'll see the main asset class, that stands out to me is gold. Whenever I get asked about inflation hedges, most people bring up the word gold because that's what their dad and mom told them. Well, as you'll see, gold has only outperformed inflation half of the time.
While global and US Stocks have the  highest median average return during an inflation period.  You'll also see the real estate - low of -7 to a high of 26 and a median of 7. 
You'll also see many people are saying "Buy energy stocks." You'll see with energy -38 on the low, high of 36, an average of -11%. So what's the takeaway, Paul? The takeaway is let's not be over-worried and stressed right now. Goods and services will continue to be sold. Inflation is an essential component of the global and the US economy, and it's important to have inside our economy, but let's settle down, relax, let the media do their job, which is to increase your blood pressure and to try to get you to do uneducated and unintelligent things with your money. 

Let's not give way to that. Remember, go to AristaWealth.com, and look at other Let's not give way to that. Remember, go to AristaWealth.com, and look at other significance, and don't forget to subscribe, rate, and review.