How to defend against inflation & potential recession
No surprise here, inflation accelerated to nearly 8% in Feb. Not only do we have pressures from wage hikes and high oil prices (which filters into pretty much everything else in our economy), Biden is now thinking of oil embargos on Russia which will worsen the crisis.
Moreover, some 50-80% of leading edge chips use neon gas from Ukraine. Chips shortage is already a massive problem right now even prior to this crisis.
Markets right now are getting killed. Fed is planning on some 5 rate hikes this yr. I understand why the U.S. is cutting off Russia but this has massive repercussions for the rest of the world in driving up inflation and potentially (maybe even likely) sending us into a recession as rates are hiked aggressively. Russia probably took all this into the calculus of deciding to invade but no matter what we do (punish or not), we are screwed in some way. Though at least if we didn't impose severe sanctions, outside of Ukraine the rest of the world wouldn't be screwed. Honestly have no idea what the answer is.
What I do wonder though, how are you guys thinking of defending against inflation? Combination of falling markets + inflation means we are FAR worse off (fewer dollars, and those dollars can buy less)....it's frustrating also seeing our comp increases from last year's inflation quickly becoming meaningless
https://www.wsj.com/articles/inflation-proof-your-portfolio-investments…
study the early 70s, korean war, and cuban missile crisis for perspective
Perfect post. The Fed and their continual market manipulation since Greenspan have caused unrealistic return expectations for many on this website and it shows when individuals say shit like "the market is getting killed" as a result of any sustained pullback. I'd argue we are seeing a market correction, especially in tech stocks where valuations were just unrealistic for at least the past decade.
Are you able to elaborate?
My commodity ETF is ripping, so that’s something. Once I’m in the green, I’ll rebalance and buy some depressed indexes.
Traditional hedges against inflation are gold, oil, and real estate.
Check GLD and DJP.
during post WW2 inflation which averaged 4.5% from 1945-1980, the case shiller housing index only returned about 5.5%
gold was only good during the 1970s. could be good for hyperinflation, but it's not as great as people make it out to be
https://www.wsj.com/articles/gold-as-an-inflation-hedge-what-the-past-5…
https://www.fuqua.duke.edu/duke-fuqua-insights/harvey-gold-hedge
https://www.fuqua.duke.edu/duke-fuqua-insights/campbell-r-harvey-gold%E…
for comparison, large caps returned over 11% during that time and small caps over 13%
Inflation is way higher than 8%.
Im all in on cumrocket
Borrow money and invest in experiences.
It's officially announced that there is a ban on Russian foreign oil as of March 8th, 2022.
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