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Old 04-18-2021, 05:21 AM   #942
Edward64
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Join Date: Oct 2005
Quote:
Originally Posted by sterlingice View Post
There's a small part of me that is legit worried about the greater stock market at a whole. Not because of GME but just because of all the fuckery that's clearly going on (and, yes, I get that it has been going on for a long time). But I think we all pretty much agree that very little was fixed after 2008. That makes me worry we're just going to have this frothy mess of bubbles with panics every few years just like there were from the late 1800s until Glass-Steagall in 1933.

A couple of cute shares of GME aren't going to protect me from hyperinflation or a 2008-style crash to my 401k.

Crashes come and go, used to it with what I've experienced since the dot-com crash. But totally unknown to me is inflation, am more worried about 70-80's style inflation (is hyperinflation like Venezuela even a possibility?).

Found a Jun 2020 article on how to invest with high inflation. Some of his rationale for inflation is what I'm reading today.
Inflation Will Come: Here Are Five Ways To Combat It

Some context. We've been enjoying really low inflation Historical Inflation Rates: 1914-2021 | US Inflation Calculator

Quote:
While inflation was averaging over 10% in the 1970s and 1980s, the last decade has seen inflation in the US at a meager 1.42%.

From what I've been reading, this is the question ... what does $2-3-4T do to the economy. Question for the more knowledgeable here, does the Fed really have to print more money or can we rely on China and others?
Quote:
While the presence of COVID-19 will likely keep inflation at bay for the foreseeable future, it’s a good idea to have your inflation-hedging positions ready for what is likely to come in the next few years. Annual budget deficits have become so enormous that the only way to finance them is for the Federal Reserve to increase the money supply. The downside? We will all pay the price in the form of massive and sustained inflation. In response to the lockdown, the government will produce its first multi-trillion dollar deficit this year, and no one has multi-trillions of dollars to lend to the government. The Fed will have to print the money the government needs to borrow. Eventually, significant inflation will follow.

I assume his recommendation is stocks for like consumer staples, something people will continue to buy even in hard times and not fancy tech gadgets.
Quote:
Investing in Stocks

If there is one sure-fire way to beat inflation over long periods of time, it’s investing in stocks. Many companies are able to pass of rising prices to the end customer, so the impact to the bottom line can be minimized. Don’t get me wrong, I’m not saying that inflation is good for equities. What I am saying is over the long haul, stocks have outperformed inflation by a significant margin due to price setting power.

I'm really not a gold guy. I do wonder if bitcoin and cryptos can be a hedge against inflation.
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Investing in Hard Assets

While not all commodities are good inflation hedges, looking towards metals and energy have performed quite well. Gold has traditionally been thought of as a good hedge against inflation, has actually done quite well in recent times absent of inflation even being an issue. Why? Partly because many people fear inflation will be a problem in the future and they would like to hedge their bets. Some commodities, like agricultural products and industrial metals, can actually do poorly during periods of high inflation as demand declines.

TIPS is probably where I would move more of my portfolio into if I see inflation starting to creep up and more MSM inflation worry fears.
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Fixed Income

Treasury Inflation Protected Securities (TIPS) are government securities that not only pay interest, they are guaranteed to keep up with the rate of inflation.

This I can definitely see moving a major portion of portfolio into if worried about inflation. Been thinking about "O" or Realty Income Corporation for dependable dividends in retirement anyway.

Quote:
Investing in Real Estate

Whether you are investing directly in real estate or using publicly traded REIT’s, they can both help your portfolio in the face of higher inflation. Because real estate tends to maintain or increase in value over time, it is a popular hedge for people to utilize. Because rents as well as home values tend to rise during inflationary periods, this is not an area to be overlooked.

Last edited by Edward64 : 04-18-2021 at 05:24 AM.
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