Inflation is an insidious threat that wipes out investment returns and erodes savings and purchasing power. As the central bank governor said, whether inflation is temporary or more permanent, and rising prices throughout the US economy are worthy of investors’ attention. Laffer Tengler Investments Chief Investment Officer Nancy Tengler said: “Controlled burns will soon become wildfires.” Barron asked six investment professionals about strategies for hedging and profitability. They say forget gold, but Treasury Inflation Protected Securities (TIPS) is an obvious tool. We highlight four options for investors to consider:
Strategists say that natural resource stocks are a good source of inflation because they are positively correlated with inflation. During the period of inflation from the mid-1960s to the early 1980s, the performance of oil and gas, agriculture, metals and mining stocks outperformed the broader market, and could play a role in mitigating the impact of this high price, Northern Trust Wealth Management Corporation’s portfolio research .
In terms of natural resources, Tengler likes energy companies, including Chevron (Chevron, stock code: CVX) and EOG Resources (EOG), agricultural companies such as Caterpillar (CAT) and Deere (DE), and water supply company Xylem (XYL).
Although many strategists have reservations about using inflation as a hedge currency, some say it makes sense to indirectly bear the limited supply of Bitcoin. Tengler recommends Square (SQ), which holds Bitcoin on its balance sheet. For blockchain exposure, she likes the exchange traded fund Amplify Transformational Data Sharing (BLOK).
Christopher Didier, managing director of Baird Family Wealth Group, said: “Inflation, you should have the ability to raise rents.” Compared with apartments, main residences and urban residences, he prefers multi-family houses and lakes. Real estate and suburban housing. He also advises clients to consider undeveloped land, redevelopment of industrial land and farmland.
Leuthold Group chief investment strategist Jim Paulsen (Jim Paulsen) said that when inflation increases, scarcity will be at a premium. With the help of luxury watches and other commodities, demand tends to rise with rising prices, the so-called Vibren effect. Consider the price of the Audemars Piguet Royal Oak Giant Tree 15202ST, which increased by 57% from November 2018 to November 2020. From watch price trends. Since then, this watch has risen by 89%, reaching approximately $100,000. Bloomberg data shows that a sign of rising demand for high-end watches is that Swiss watch exports have increased by 37% year-on-year, the fastest rate since 2010.
Steve Ivy, CEO of Heritage Auctions, the world’s third-largest auction house, said that in the past year, all categories in the world’s approximately $75 billion collectibles market (excluding fine art) have been displayed. The growth is mainly due to inflation concerns and the increase in fiscal stimulus means that people just have more money. To name a few, the value of rare coins and comic books has increased by about 20%, while baseball cards have increased by 15% to 40%. The storage cost of collectibles is high, taxes and liquidity are also taken into account, so Ivy said that investors should plan to keep them for at least 10 years.