With the current trend towards high inflation which sectors are best investing into, in order counter high inflation impacting on your portfolio?
Energy and resources traditionally do well when inflation climbs
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Inflation has already hit for way over a year. The time for buying & protection for inflation was done during Spring 2020. Investors have already been rebalancing more recently to take into account prolonged years of possible declining inflation.
Example:
2022 • 8% inflation
2023 • 6% inflation
2024 • 4% inflation
2025 • 2.5% inflation
Looking at this scenario, cash not required for longer than 1-2 years should most likely be invested somewhere other than purely cash, bonds or equivalent.
Private equity, REITs, Quality stocks with pricing power on their products are sufficient locations for a 5-10 year holding period - though zero guarantees that you personally will come out on top. Nobody knows.
By the time you hear what’s happening in the mainstream media, the ‘thing’ has already happened. So best to take your own approach to forward thinking & investing.
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Stocks are generally a good call in inflationary situations.
If you’d like it more specific: stocks of companies that operate in markets with very inelastic demand. E.g. energy. Or better still: companies producing Veblen goods where demand increases with price, e.g. luxury goods.
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Inflation: stocks, commodities
Depression: treasuries
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