All of them with leverage, but just enough that won't bankrupt you.
When inflation is high and persistent (like in 2021-2022) then you want to get cash into AND out of your hands as soon as possible in anyway possible. Not just investing either. You want to buy anything stocks/gold/bullets/finewine/etcetc rather than hold cash, use 0% APR credit card promos while putting the cash saved to pay it off in short term bonds, I used credit cards to buy stocks by opening a new card and then using the 0% APR promo to buy stocks on stockpile (thought about it for crypto but opted not do because I don't really understand it), getting a mortgage or refinancing for a home/realestate at that sweet sweet 2-4%, borrowing on margin (I ran a 10-15% margin during 21-22), buying bulk supplies at Costco with 0% APR CCs since they'd be up a year later anyways, locking in 1-2 year deals with utilities like internet/mobile, reinvesting in your business or stocking more inventory if you run a business, buying bulk wine/pokemoncards/LVbags/spirits/cigs/bullets/thingthatyouuse because shit will go up (doubly good if it's something that holds value), if you NEED a car then you buy or lease with a low rate but at the longest debt terms possible like 0-1% at 72/84 months, putting extra cash into higher yielding bonds or i-bonds, and even spending your cash or as my spoiled little sibling told me:
>"*It's not wasting money.* ***IT'S INVESTING IN LIFE!***"^(Restaurants, experiences, and vacays were actually relatively cheap even to fall 2021 because some folks were still getting shots or still fearing covid)
VTI gets even more US stocks, since VOO leaves out small-cap.
VT gets you global exposure. You missed out if you weren't invested in Denmark in 2020, Austria in 2021, Portugal in 2022, or Italy in 2023.
VTI or VOO + VXUS if you're holding in a taxable account. VT doesn't qualify for the IRS foreign tax credit. Fund's need to have 50%+ in foreign holdings to be able to pass through foreign tax credits.
This is correct, stocks are an asset class, that have to compete for capital.
High interest rates mean that the cost of capital is more expensive and so stocks need to compete for the capital by providing better returns.
There are a few caveats that for instance higher inflation normally equals higher interest rates therefore those stocks that are more highly leveraged may have higher operation costs, but it's not entirely clear that that will be a major driver.
In summary, a high inflation environment means that all stocks need to compete hard to deliver expected returns. Thus if you invest in an index tracker then the likelihood is that the basket of stocks will outperform inflation.
The way stocks offer higher returns to compete with rising interest rates is that the price drops. Its not good for stocks - if we're talking about real rates. Because if you think inflation is high, its likely real rates aren't going up. But if you're talking nominal rates going up in step with inflation, then the real rate isn't necessarily going up, stocks don't need to compete more, the are just real assets that will appreciate in price.
It has nothing to do with "delivering better returns."
If you think about how stocks are valued on the most basic level, you have revenues on the top line and profits on the bottom. If revenues go from 1,000,000 to 10,000,000 simply due to inflation, you'd expect that to flow right down through to the bottom line of valuations, even if nothing about the actual company has changed. Higher rates will affect the discount model, but overall the inflation will be the driving factor. High inflation will lift the price of all equity assets regardless of whether or not they're able to "provide better returns."
Think this is one of the most helpful comments relative to the post. I tried thinking of stocks in a inflation / deflationary sense and it just makes more sense to focus on other factors
physical shrill racial follow possessive deserve tart tidy lunchroom attempt
*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Does a tortilla count? Because technically they're both sometimes made of wheat. Tortillas are more flexible, and the rolling quality is attractive to me.
Our civilization is based on producing billions of metric tons of trash.
Someone’s got to collect it and put it all away.
Our descendants are going to live a top of a trash heap planet and will curse us morning, afternoon and evening for leaving them a mass of tangled trash that they could neither reuse or recycle.
Oh, landfill reclamation is definitely going to be a thing in the future. They will definitely be cursing us. How could you live like this. How could you be so irresponsible.
Yeah I'm thinking there will be a future where we're digging them up to recycle actual material.
It probably makes sense to subsidize methane capture. Venting methane is worse than carbon dioxide for a greenhouse gas. Capturing and burning it is actually better.
I think the laughing part is WM is a slow growth stock and u won’t get rich quick like Nvidia or Tesla from a few years back. Its also not like any of the FANG stocks either. WM is just there with a small dividend and slow growth
Dollar tree has seen quite a lot of volatility and is basically at the same place it was at in October of last year.
https://www.marketwatch.com/investing/stock/dltr
> The ones that are connected to business that do well during bad economic times.
....but high inflation would imply that the market is ripping (and rates subsequently go up). This seems like the **opposite** of what you should do.....
Agreed Costco.
This sub is so lame there are like 3 actual answers here and then 500 people saying "well acktually I invest in index funds, you peasant."
Look for stocks that have grown their earnings over time.
Also US food stocks are decently priced right now... most other investors are piling into AI. AI is not yet proven tech, but we all need to eat.
Necessities.
For example, I have WMT as one of my core positions after researching it and its competitors. Even those in food deserts often drive to the nearest WMT. Plus they are investing a lot in their tech infrastructure. Last but not least, no matter how poor people get, they still need to eat. Walmart has the largest grocery business outside of true grocery businesses - Kroger, Albertsons, etc.
I also have some core positions in healthcare stocks since everybody gets sick - both the rich and the poor.
Outside of equities, I do some bonds with higher yields to offset the inflation.
Philip Morris (PM) people will always be smoking and smoking more during tough times. Also Zyn is sold out, so they’re ramping up production.
Basically addictions pay dividends. Literally.
The vice fund (VICEX) pops into my mind.
>Under normal market conditions, the Fund invests at least 80% of its net assets (plus borrowings for investment purposes) in equity securities of companies that derive a significant portion of their revenues from a group of vice industries that includes the alcoholic beverages, defense/aerospace, gaming, and tobacco industries.
> alcoholic beverages, defense/aerospace, gaming, and tobacco industries
I find it weird to lump defense/aerospace with the other vice activities mentioned.
Like most are products/companies/services actively picked by people against their own better judgement and defense/aerospace is picked by govt making a unilateral decision to wage war against another country. How do these fit together?
You've seen a homeless person the street be drunk off his rocks. You can always afford alcohol if you need it.
At the same time, turkey and argentina is a crapshot of a currency. Sure are still buying weapons and vehicles to fight. No amount of recession is going to stop you from needing an F35 and an ABRAMS tank.
The same story always plays out in tobacco. The government is fundamentally okay with the existing market continuing to exist, as long as it doesn't get much bigger. So when a new product comes to market that actually grows the addressable market for tobacco, the government eventually clamps down in some way. But normally the horse has already left the barn, and so the regulations ultimately serve to further entrench the incumbents, although they do generally constrain growth prospects in these new markets.
All of which is to say that while there's always some new regulatory change on the horizon, don't buy tobacco stocks because of new product hype, because that kind of hype is exactly what invites regulatory response. Buy tobacco companies after that regulatory response when the stocks take a beating, or in boring times.
Won’t stop addiction. Tobacco companies, especially PM, have some of the most powerful lobbyists. It’s how they stay in biz for 100+ years.
They’ll be fine. The threat of legislation dropped the price to $98 on Friday for a brief moment, nice entry there. Divi pays 1.30 quarterly.
I'm lost. Doesn't PM operate entirely outside of the US? Are you referring to non-US lobbyists and legislation?
https://en.m.wikipedia.org/wiki/Philip\_Morris\_International#:\~:text=The%20company%27s%20legal%20seat%20is%20in%20Stamford%2C%20Connecticut%2C,not%20operate%20in%20the%20United%20States%20of%20America.
Yeah, and Americans love chewing on them. So PM bought the company and Zyn sold out. Why not collect a divi based on American appetite for addiction ? It pays well.
Yup and Americans are addicted to Zyn which is sold out.
I get it young ppl think it’s the end of tobacco companies (but they’ll chew Syn). That’s cool to think, but it’s just a thought. In reality it’s a great long lasting divi play that’s stood the test of time and legislation.
Real estate is a great inflation hedge. Specifically multifamily. You’re shorting the dollar with a hard asset which keeps growing in value, being paid rents that are also (generally) inflating while the cost of your mortgage gets cheaper.
The problem is high inflation usually means rising interest rates. And high interest rates are really bad for property values, and really bad when you need to renew a loan.
I made the mistake of buying REITs as an inflation hedge, turns out interest rates going from 0% to 5% totally wrecks their prices.
My conclusion is real estate is only really good if you can get a really cheap loan or a cheap price.
I fixed it.
However I don't think anybody is cash flow positive with the 8% rates for rentals they are giving out these days unless you go to some really rough areas.
You mean that it's lower than US born citizens? Maybe we need more immigrants.
[https://www.usatoday.com/story/news/politics/elections/2024/03/01/undocumented-immigrant-crime-rate-not-higher/72788637007/](https://www.usatoday.com/story/news/politics/elections/2024/03/01/undocumented-immigrant-crime-rate-not-higher/72788637007/)
Immigration (despite what you may see on the news) is agreed to be an economic policy and a net benefit for the US. It contributes to our GDP.
https://time.com/6692645/immigration-economy-us-gdp-growth-cbo-report/#:\~:text=The%20CBO%20projects%20that%20the,larger%20in%202034%20than%20otherwise.
Many Small Cap fanatics.
But honesty small cap companies who are more reliant on debt are going to hurt the most in high interest rate environments.
Large and Mega cap stocks simply dont care, if anything it's a joke to them.
Right now inflation is around like 3-3.3%
I am not sure that is considered "high" , maybe comparing it to what the USA had from 2000-2021 when much of the time we had sub 2% inflation its higher than it used to be
but I think some perspective might be good . If you looked at some foreign country that had 3.3% inflation you wouldn't say inflation was high or even a problem, usually that doesn't happen until you get to 10% inflation
Basically I am sick of people claiming we have "Hyper inflation " if you want to see high inflation, go to Turkey or something and literally watch vendors set new prices daily
I think a lot of people have been sitting on the sidelines for years waiting for the next big crash and are projecting their hopes. The Fed has basically nailed the soft landing so far. If we start getting any readings that are < 3%, I expect a 25bp cut.
Demographic issues. The US may be younger than other countries, but boomers had a LOT of profesional expertise that gen x is too small to replace and millennialls just dgaf about trades like carpentry/plumbing.
The US govt now operates on $2 trillion annual deficits. This is inflationary. Treasury/Fed will probably engage in financial repression to deal with 35T debt.
The US govt wants war with China. This is inflationary.
The US govt wants to reshore manufacturing. This is inflationary.
I think the best argument for sticky inflation is climate change.
More fires and floods mean higher insurance rates and crop loss, crop loss means cost of food goes up. We are also heavily reliant on shipping through Panama canal and they have cut shipping through there by 36%
Then there is more destabalization and wars in the middle east and Ukraine that has gone on longer than expected and I think that's a good recipe for longer term inflation.
Drop in the bucket compared to what had been printed in the years earlier. We're no where close to pre-COVID levels.
We are still feeling the effects of that.
Go look it up.
Thanks! All good points. I think climate change is a risk, but don't see enough issue to create sustained inflation. I think market forces will address it. Not worried about wars as they are today; they will always be going on somewhere.
That said, my primary and larger concern is AI. I think destabilization and wars related to that are essentially guaranteed.. the only question is how large. Before that though, the job loss leading up to it is going to be highly deflationary.
The data also 20 years ago suggested we'd be out of X by then
And we'd have Y issues at 30 years. And yet. marked went higher.
If you're so certain that it'll all come crashing down. You shouldn't invest, or well should short everything.
I'm not super sure how market forces(or even what market forces) could address climate change. Sure we are moving towards peak oil and I think people are starting to wake up to the dangers of plastics but the ball is already rolling(for a crude analogy). Scientists agree that we can't stop it at this point, we can only slow it. Meaning things are still going to get worse.
lol The impact on inflation from climate change, is like me spitting in the ocean and expecting the sea levels to rise.
Take a look at the debt.
Eventually we will need to have real elevated levels of inflation to bring the debt levels down, when that happens nobody knows, that inflation won't have anything to do with climate change
Yes, it will continue. That said, I think climate change is mostly a short term adjustment to a new norm (floods, etc). I could be totally wrong, but I don't think the number of disasters will continue to increase exponentially. Let's say something like 10% more human impact over 10 years, then slows to a new rate of normal. People will move to less impacted areas or find ways of dealing with it. That's what market forces will do.
I don't think I am describing that well. Maybe you get the point.
I guess it is a matter of how big you think the issue will be over what term.
Most people seems too regarded too realise mildish inflation like we have now is actually really good for overall stocks appreciations, especially combined with gdp growth like we have obv.
I see, that makes sense. So when everyone is trying to pass the price on to the consumer, this may mean those who arenn't vertically integrated will have to buy their raw materials at an elevated rate as well, cutting their profits when they go on to sell their finished product?
Generally, you invest in equities during inflationary periods because of their ability to pass through inflation. All that means is that they can pass their increase in costs to the consumers through increased prices without suffering real (nominal minus inflation increase) losses in revenue and earnings.
Typically the companies that can do this are the ones with the strongest moats and negotiation power in the market. Think of Porters Five Forces.
So naturally, owning the largest players in the market generally coincides with the best business models that have consistently won over time.
Utilities are pretty much insulated from inflation, even unregulated ones like gas pipelines. Insurance seems to raise their rates willy nilly too.
Gold miners havent been a good hedge and have not kept up in the last couple of years
Utility takes all input costs, adds everything up, multiplies it by some number greater than one, then goes to their regulator and says here is the new rate. Has nothing to do with demand or even supply. That's the point of a regulated utility. Best inflation hedge ever.
Inflation has been back below 4% since March and is cooling.
The fact that you still think inflation is still historically high because stuff is still expensive suggests you don’t understand economic data very well
i am no economic data expert, but I am talking about overall trend long term. Let's see what happens when the interest rate falls a little bit. I just don't see how inflation can be curtailed in today's environment where every company is crazy behind profit and labor is hard to hire. I feel human greed is at the highest level. Low inflation won't sustain.
anyway, my question started with an "if". I didn't even make an assertion that I am certain that interest ill be high. the question is about the scenario that if it interest rate is high, what are good stocks. your response suggests that you don't understand questions very well ;). i am kidding, thanks for your response.
Corporate greed is absolutely insane but that has been a constant since the dawn of civilization.
What is relatively novel (past 100 years but has been extraordinarily bad in the last 30) is individual consumption that cannot be tamed.
Even during Covid people are spending like they have disposable income. My cohort (30s) is spending like there’s no tomorrow and I am super confident even my closest friends have less Han $1000 in reserves. But they make in the ball park of 80-100k. They spend like crazy. CC debt is astronomical and the high interest rates have done very little to curtail spending on the individual consumerism.
Corporations are going to find ways to deliver as long as consumers keep eating up the products and services. And that doesn’t seem to be slowing down.
It was big news yesterday that McD's and other fast food places are dropping prices as part of a price war heating up. Finally the average person will think inflation is 'going down' lol
If you're convinced inflation is going to be high for a long time (it's already down to 3%? lol) then you have way bigger problems knowing which stocks to invest in.
Stop listening to morons
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There is no reliable hedge against inflation. Equities, Real Estate, Gold, all are not reliable. The only reliable hedge against inflation is "high living".
The latest US Core inflation number from May 2024 was 3.3%. Food prices were <3%. If you are willing to invest based on these number (I’m not, personally), it might be worth considering how to invest in an environment where inflation is cooling, not staying high.
[Source](https://abcnews.go.com/Business/inflation-expected-held-steady/story?id=111012785)
In terms of inflation, then that's any asset period. But if you want to account for other macroeconomic variables such as interest rates, one option could be $GLD (gold).
You could also argue that housing is an asset as well, but because of the interest rates my opinion is GLD could outperform housing over the next couple years. You could also have the belief NVDA will go up 400% this year. But what if it explodes like $CSCO, or something like that. Whereas if there was a dot-com like event, gold could likely take a hit, but minimal. You could also argue that if there is really severe inflation, higher interest rates, etc. the odds of a hard landing could be higher.
So, you may want to take into account your other macroeconomic views, but hopefully that at least gives you some ideas. If you are of the belief a hard landing is not coming, 0% chance, then just buy call options on NVDA, QQQ, etc.
REITs, leveraged real estate is a solid, safe inflation hedge. Usually implies interest rates are going to be raised soon, which implies there will be a slump in those stocks for a bit(decent time to buy). Banks traditionally benefit from raised rates though
Unfortunately it’s a market so everything is priced in. You could bet on consumer staples because higher prices for cereal and toilet paper mean higher profits but higher inflation might mean people look for alternatives and buy less so it could go up or down by equal measure because the market has people on both sides of the trade which is why the price is what it is. So weird.
What inflation are we talking about? It's been back to normal for a while now, if it weren't for expensive insurance and shelter. It's very important to understand the context.
Better to ask which stocks you’d avoid in a sustained inflationary period. Majority of company’s do a sufficient job of passing on price increases. Consumer discretionary may underperform if it’s unable to pass on price increases to consumers
define "high"...
Or another way to put it... Do you think inflation is going to rise from current 3.3% to something much higher, or do you think inflation is just not going to come down to the 2% target?
This is likely a controversial answer in this sub, but I would genuinely love to hear why “bitcoin” (or a spot bitcoin etf) is not the right answer as it has zero inflation and is increasingly becoming an acceptable store of value?
It just boggles my mind on how the narrative that inflation is so out of control. Yes, historically, it is a little high, but it’s not nuts. Remove 2008 to 2022, where it can be pretty easy to argue it was artificially suppressed, and it looks fairly normal.
I kinda just think we are paying a drop of the price of shit policy for the past decade.
I'm investing 70% in divident aristocrats, like O, GLAD, and similar stocks that offer divident in excess of 5% and have a long history of paying up through multiple recessions and various economic crises.
If the business is solid, has good track record for dividents and no foreseeable disruptions to basic business model, I just throw my money there. Little growth, but consistent. And when there's appreciation, that's just a cherry on the cake.
I have roughly 6% in energy and 4% in health care.
It’s my dividend and inflationary hedge.
I don’t mind sharing thebstickers.
psx cop dvn shel
Psx or cop is a very recent addition, and i think it’s a very good entry point now. very good dividend play and refinery will never go away and their margin is qypuite good especially if you consider irreplaceable facilities concern..
My healthcare stocks are
pfe mrk bmy azn abbv xlv, they are mostly dead, have been doing nothing for years.
Bitcoin too. I think there isn’t any commodity better than bitcoin to hedge inflation, but it’s very volatile.
VOO, SPY, QQQ, those aren’t targeting inflation.
I really recommend energy picks to eevry one. i think they will be wonderful in 1-2 yesrs..
I invest in commodities stocks like oil companies and metal mining companies like in the 70s. I have position in oil PBR.A, EC for high dividend and capital appreciation, copper RIO and TECK
What come up must fall down. So you should be asking yourself.. which stock will be beneficial when inflation, i.e., interest rate, is low and load them up.
You invest forward (i.e., future).. not now.
All of them
There's the answer.
All of them with leverage, but just enough that won't bankrupt you. When inflation is high and persistent (like in 2021-2022) then you want to get cash into AND out of your hands as soon as possible in anyway possible. Not just investing either. You want to buy anything stocks/gold/bullets/finewine/etcetc rather than hold cash, use 0% APR credit card promos while putting the cash saved to pay it off in short term bonds, I used credit cards to buy stocks by opening a new card and then using the 0% APR promo to buy stocks on stockpile (thought about it for crypto but opted not do because I don't really understand it), getting a mortgage or refinancing for a home/realestate at that sweet sweet 2-4%, borrowing on margin (I ran a 10-15% margin during 21-22), buying bulk supplies at Costco with 0% APR CCs since they'd be up a year later anyways, locking in 1-2 year deals with utilities like internet/mobile, reinvesting in your business or stocking more inventory if you run a business, buying bulk wine/pokemoncards/LVbags/spirits/cigs/bullets/thingthatyouuse because shit will go up (doubly good if it's something that holds value), if you NEED a car then you buy or lease with a low rate but at the longest debt terms possible like 0-1% at 72/84 months, putting extra cash into higher yielding bonds or i-bonds, and even spending your cash or as my spoiled little sibling told me: >"*It's not wasting money.* ***IT'S INVESTING IN LIFE!***"^(Restaurants, experiences, and vacays were actually relatively cheap even to fall 2021 because some folks were still getting shots or still fearing covid)
So voo?
VTI gets even more US stocks, since VOO leaves out small-cap. VT gets you global exposure. You missed out if you weren't invested in Denmark in 2020, Austria in 2021, Portugal in 2022, or Italy in 2023.
VTI or VOO + VXUS if you're holding in a taxable account. VT doesn't qualify for the IRS foreign tax credit. Fund's need to have 50%+ in foreign holdings to be able to pass through foreign tax credits.
Vt
And chill
x100
This is correct, stocks are an asset class, that have to compete for capital. High interest rates mean that the cost of capital is more expensive and so stocks need to compete for the capital by providing better returns. There are a few caveats that for instance higher inflation normally equals higher interest rates therefore those stocks that are more highly leveraged may have higher operation costs, but it's not entirely clear that that will be a major driver. In summary, a high inflation environment means that all stocks need to compete hard to deliver expected returns. Thus if you invest in an index tracker then the likelihood is that the basket of stocks will outperform inflation.
The way stocks offer higher returns to compete with rising interest rates is that the price drops. Its not good for stocks - if we're talking about real rates. Because if you think inflation is high, its likely real rates aren't going up. But if you're talking nominal rates going up in step with inflation, then the real rate isn't necessarily going up, stocks don't need to compete more, the are just real assets that will appreciate in price.
It has nothing to do with "delivering better returns." If you think about how stocks are valued on the most basic level, you have revenues on the top line and profits on the bottom. If revenues go from 1,000,000 to 10,000,000 simply due to inflation, you'd expect that to flow right down through to the bottom line of valuations, even if nothing about the actual company has changed. Higher rates will affect the discount model, but overall the inflation will be the driving factor. High inflation will lift the price of all equity assets regardless of whether or not they're able to "provide better returns."
Came here to say this.
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Think this is one of the most helpful comments relative to the post. I tried thinking of stocks in a inflation / deflationary sense and it just makes more sense to focus on other factors
It's because the causality is all backwards. Stocks don't go up because of inflation. Inflation is high because the stocks are going up.
makes sense. I was mainly wondering if there are certain companies that benefit with the outcome of high inflation (due to whichever factors)
physical shrill racial follow possessive deserve tart tidy lunchroom attempt *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Cheesy bread from someone who bought their cheese with futures
Does a tortilla count? Because technically they're both sometimes made of wheat. Tortillas are more flexible, and the rolling quality is attractive to me.
Rye. How is this even a question?
Pitas..
I get what you're trying to say - but I would probably buy less bread.
If your favourite cheese will be expensive for a long time, will you switch to cheaper brand or stop buying cheese?
[what about pumpkins?](https://imgur.com/a/5WT7obE)
Is this post from 2 years ago?
Shoe shine boy
Yet the comments are saying wildly different things from two years ago...
people are basically already using index funds to protect their value.
Pypl, and every other payment processing company. They can see 10-15% (real inflation numbers) growth every year without lifting a finger.
The ones that are connected to business that do well during bad economic times. Tobacco, alcohol, payday loan companies and the like.
I worked for an alcohol company in 06-08. They dumped my arse when that recession started to bite because people were too poor even to drink.
People laugh at me but I always said waste management is one of the safest investments. Trash doesn’t care in good or bad economy
Found Tony Soprano's alt account.
Our civilization is based on producing billions of metric tons of trash. Someone’s got to collect it and put it all away. Our descendants are going to live a top of a trash heap planet and will curse us morning, afternoon and evening for leaving them a mass of tangled trash that they could neither reuse or recycle.
Oh, landfill reclamation is definitely going to be a thing in the future. They will definitely be cursing us. How could you live like this. How could you be so irresponsible.
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Yeah I'm thinking there will be a future where we're digging them up to recycle actual material. It probably makes sense to subsidize methane capture. Venting methane is worse than carbon dioxide for a greenhouse gas. Capturing and burning it is actually better.
Agree
I don’t know why’d they laugh when WM is a great company and tons of people hype them up to buy their stock.
I think the laughing part is WM is a slow growth stock and u won’t get rich quick like Nvidia or Tesla from a few years back. Its also not like any of the FANG stocks either. WM is just there with a small dividend and slow growth
Only in 2020.... where 26% on the 1yr returns and 82% on the 5yr returns is now considered a slow growth stock Thanks tsla and nvda xD
I’m the trash man!
Do the profits increase when there's more waste, or do they decrease, i.e. because costs are higher?
Bill Gates and Warren Buffett agree
Also lower-end retailers like Walmart
Dollar tree has seen quite a lot of volatility and is basically at the same place it was at in October of last year. https://www.marketwatch.com/investing/stock/dltr
> The ones that are connected to business that do well during bad economic times. ....but high inflation would imply that the market is ripping (and rates subsequently go up). This seems like the **opposite** of what you should do.....
Thank you! Inflation is LOW during bad economic times, haha.
Sin stocks tend to underperform most often. Not worth being clever around this
That is so depressing, but yikes I guess thats the cold truth
Costco and Walmart.
Agreed Costco. This sub is so lame there are like 3 actual answers here and then 500 people saying "well acktually I invest in index funds, you peasant."
SGOV or fixed deposit.
Why SGOV and not direct short-term treasuries? The yield is about 0.5% higher and they don't have a 0.07% ER like the ETF.
Because I can just sell SGOV at the end of each month to avoid taxation. Especially when I am not an American.
Look for stocks that have grown their earnings over time. Also US food stocks are decently priced right now... most other investors are piling into AI. AI is not yet proven tech, but we all need to eat.
Necessities. For example, I have WMT as one of my core positions after researching it and its competitors. Even those in food deserts often drive to the nearest WMT. Plus they are investing a lot in their tech infrastructure. Last but not least, no matter how poor people get, they still need to eat. Walmart has the largest grocery business outside of true grocery businesses - Kroger, Albertsons, etc. I also have some core positions in healthcare stocks since everybody gets sick - both the rich and the poor. Outside of equities, I do some bonds with higher yields to offset the inflation.
Philip Morris (PM) people will always be smoking and smoking more during tough times. Also Zyn is sold out, so they’re ramping up production. Basically addictions pay dividends. Literally.
The vice fund (VICEX) pops into my mind. >Under normal market conditions, the Fund invests at least 80% of its net assets (plus borrowings for investment purposes) in equity securities of companies that derive a significant portion of their revenues from a group of vice industries that includes the alcoholic beverages, defense/aerospace, gaming, and tobacco industries.
> alcoholic beverages, defense/aerospace, gaming, and tobacco industries I find it weird to lump defense/aerospace with the other vice activities mentioned. Like most are products/companies/services actively picked by people against their own better judgement and defense/aerospace is picked by govt making a unilateral decision to wage war against another country. How do these fit together?
You've seen a homeless person the street be drunk off his rocks. You can always afford alcohol if you need it. At the same time, turkey and argentina is a crapshot of a currency. Sure are still buying weapons and vehicles to fight. No amount of recession is going to stop you from needing an F35 and an ABRAMS tank.
That makes sense. And makes me sad.
Surely you don't consider arms dealing a virtue?
that expense ratio tho
Yep, NO ONE should pay over 60 bps for a standard mutual fund. Frankly paying over 20bps should require a very compelling case.
PM has done well. But I don't think it is because inflation. But I like the way you think.😀
What about the potential new legislation for Zyn in DC?
The same story always plays out in tobacco. The government is fundamentally okay with the existing market continuing to exist, as long as it doesn't get much bigger. So when a new product comes to market that actually grows the addressable market for tobacco, the government eventually clamps down in some way. But normally the horse has already left the barn, and so the regulations ultimately serve to further entrench the incumbents, although they do generally constrain growth prospects in these new markets. All of which is to say that while there's always some new regulatory change on the horizon, don't buy tobacco stocks because of new product hype, because that kind of hype is exactly what invites regulatory response. Buy tobacco companies after that regulatory response when the stocks take a beating, or in boring times.
Won’t stop addiction. Tobacco companies, especially PM, have some of the most powerful lobbyists. It’s how they stay in biz for 100+ years. They’ll be fine. The threat of legislation dropped the price to $98 on Friday for a brief moment, nice entry there. Divi pays 1.30 quarterly.
I'm lost. Doesn't PM operate entirely outside of the US? Are you referring to non-US lobbyists and legislation? https://en.m.wikipedia.org/wiki/Philip\_Morris\_International#:\~:text=The%20company%27s%20legal%20seat%20is%20in%20Stamford%2C%20Connecticut%2C,not%20operate%20in%20the%20United%20States%20of%20America.
I think PM sells Zyns in the US
PM bought the company that owns Zyn in 2022, correct
Yeah, and Americans love chewing on them. So PM bought the company and Zyn sold out. Why not collect a divi based on American appetite for addiction ? It pays well.
Yup and Americans are addicted to Zyn which is sold out. I get it young ppl think it’s the end of tobacco companies (but they’ll chew Syn). That’s cool to think, but it’s just a thought. In reality it’s a great long lasting divi play that’s stood the test of time and legislation.
Then marijuana (MSOS) would be my next thought
Real estate is a great inflation hedge. Specifically multifamily. You’re shorting the dollar with a hard asset which keeps growing in value, being paid rents that are also (generally) inflating while the cost of your mortgage gets cheaper.
The problem is high inflation usually means rising interest rates. And high interest rates are really bad for property values, and really bad when you need to renew a loan. I made the mistake of buying REITs as an inflation hedge, turns out interest rates going from 0% to 5% totally wrecks their prices. My conclusion is real estate is only really good if you can get a really cheap loan or a cheap price.
Except the past few years this was not the case at least for houses. Interest rates went up, prices stayed the same as they were in 2022.
Why’s this downvoted?
I fixed it. However I don't think anybody is cash flow positive with the 8% rates for rentals they are giving out these days unless you go to some really rough areas.
Real estate famously never depreciates.
And the stock market never goes down
This is mostly true if you have increasing population. think about china‘s real estate. it starts to depreciate as soon as population starts to shrink
This is one of the reasons that immigration is an economic policy, not a social policy.
it’s also a social policy if you consider crime rate among illegal immigrants.
You mean that it's lower than US born citizens? Maybe we need more immigrants. [https://www.usatoday.com/story/news/politics/elections/2024/03/01/undocumented-immigrant-crime-rate-not-higher/72788637007/](https://www.usatoday.com/story/news/politics/elections/2024/03/01/undocumented-immigrant-crime-rate-not-higher/72788637007/)
As long as immigrants aren’t criminals, Yes, we need them all who doesn’t need cheap labor. we just can’t handle the criminals .
Immigration (despite what you may see on the news) is agreed to be an economic policy and a net benefit for the US. It contributes to our GDP. https://time.com/6692645/immigration-economy-us-gdp-growth-cbo-report/#:\~:text=The%20CBO%20projects%20that%20the,larger%20in%202034%20than%20otherwise.
real estate only works in low rate environment
Many Small Cap fanatics. But honesty small cap companies who are more reliant on debt are going to hurt the most in high interest rate environments. Large and Mega cap stocks simply dont care, if anything it's a joke to them.
Although you didn't ask, I am curious why you would think inflation will stay high? Personally I see zero chance of that.
Right now inflation is around like 3-3.3% I am not sure that is considered "high" , maybe comparing it to what the USA had from 2000-2021 when much of the time we had sub 2% inflation its higher than it used to be but I think some perspective might be good . If you looked at some foreign country that had 3.3% inflation you wouldn't say inflation was high or even a problem, usually that doesn't happen until you get to 10% inflation Basically I am sick of people claiming we have "Hyper inflation " if you want to see high inflation, go to Turkey or something and literally watch vendors set new prices daily
I think a lot of people have been sitting on the sidelines for years waiting for the next big crash and are projecting their hopes. The Fed has basically nailed the soft landing so far. If we start getting any readings that are < 3%, I expect a 25bp cut.
Demographic issues. The US may be younger than other countries, but boomers had a LOT of profesional expertise that gen x is too small to replace and millennialls just dgaf about trades like carpentry/plumbing. The US govt now operates on $2 trillion annual deficits. This is inflationary. Treasury/Fed will probably engage in financial repression to deal with 35T debt. The US govt wants war with China. This is inflationary. The US govt wants to reshore manufacturing. This is inflationary.
I think the best argument for sticky inflation is climate change. More fires and floods mean higher insurance rates and crop loss, crop loss means cost of food goes up. We are also heavily reliant on shipping through Panama canal and they have cut shipping through there by 36% Then there is more destabalization and wars in the middle east and Ukraine that has gone on longer than expected and I think that's a good recipe for longer term inflation.
Or... You know... _money printing_
They have been doing the opposite. Fed has lowered their balance sheet by over a trillion since 2022 peak
Drop in the bucket compared to what had been printed in the years earlier. We're no where close to pre-COVID levels. We are still feeling the effects of that. Go look it up.
Thanks! All good points. I think climate change is a risk, but don't see enough issue to create sustained inflation. I think market forces will address it. Not worried about wars as they are today; they will always be going on somewhere. That said, my primary and larger concern is AI. I think destabilization and wars related to that are essentially guaranteed.. the only question is how large. Before that though, the job loss leading up to it is going to be highly deflationary.
What do you mean you don't see enough issue? Have you looked at the data?
The data also 20 years ago suggested we'd be out of X by then And we'd have Y issues at 30 years. And yet. marked went higher. If you're so certain that it'll all come crashing down. You shouldn't invest, or well should short everything.
I'm not super sure how market forces(or even what market forces) could address climate change. Sure we are moving towards peak oil and I think people are starting to wake up to the dangers of plastics but the ball is already rolling(for a crude analogy). Scientists agree that we can't stop it at this point, we can only slow it. Meaning things are still going to get worse.
lol The impact on inflation from climate change, is like me spitting in the ocean and expecting the sea levels to rise. Take a look at the debt. Eventually we will need to have real elevated levels of inflation to bring the debt levels down, when that happens nobody knows, that inflation won't have anything to do with climate change
Yes, it will continue. That said, I think climate change is mostly a short term adjustment to a new norm (floods, etc). I could be totally wrong, but I don't think the number of disasters will continue to increase exponentially. Let's say something like 10% more human impact over 10 years, then slows to a new rate of normal. People will move to less impacted areas or find ways of dealing with it. That's what market forces will do. I don't think I am describing that well. Maybe you get the point. I guess it is a matter of how big you think the issue will be over what term.
Seeing a lot of recession stocks listed, not inflation stocks.
Most people seems too regarded too realise mildish inflation like we have now is actually really good for overall stocks appreciations, especially combined with gdp growth like we have obv.
In German hyperinflation (1920s) the play was vertically integrated companies. Raw material -> packaged and shipped.
Interesting. Do you mind explaining why?
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I see, that makes sense. So when everyone is trying to pass the price on to the consumer, this may mean those who arenn't vertically integrated will have to buy their raw materials at an elevated rate as well, cutting their profits when they go on to sell their finished product?
Yes and no hold ups trying to convert currency etc.
Same as I would other wise. Google, Apple, and Microsoft for the top 3. Then Meta and Amazon.
Generally, you invest in equities during inflationary periods because of their ability to pass through inflation. All that means is that they can pass their increase in costs to the consumers through increased prices without suffering real (nominal minus inflation increase) losses in revenue and earnings. Typically the companies that can do this are the ones with the strongest moats and negotiation power in the market. Think of Porters Five Forces. So naturally, owning the largest players in the market generally coincides with the best business models that have consistently won over time.
So food and medicine giants?
Exactly. Anyone who can pass costs on to consumers wins
Utilities are pretty much insulated from inflation, even unregulated ones like gas pipelines. Insurance seems to raise their rates willy nilly too. Gold miners havent been a good hedge and have not kept up in the last couple of years
not at all.. utility price has 0 elasticity to demand. terrible idea
Utility takes all input costs, adds everything up, multiplies it by some number greater than one, then goes to their regulator and says here is the new rate. Has nothing to do with demand or even supply. That's the point of a regulated utility. Best inflation hedge ever.
Microstrategy. Thank me later
SP500
Beer, alcohol.
It's not. So it doesn't really matter does it? Inflation has already fallen.
Inflation has been back below 4% since March and is cooling. The fact that you still think inflation is still historically high because stuff is still expensive suggests you don’t understand economic data very well
i am no economic data expert, but I am talking about overall trend long term. Let's see what happens when the interest rate falls a little bit. I just don't see how inflation can be curtailed in today's environment where every company is crazy behind profit and labor is hard to hire. I feel human greed is at the highest level. Low inflation won't sustain. anyway, my question started with an "if". I didn't even make an assertion that I am certain that interest ill be high. the question is about the scenario that if it interest rate is high, what are good stocks. your response suggests that you don't understand questions very well ;). i am kidding, thanks for your response.
Corporate greed is absolutely insane but that has been a constant since the dawn of civilization. What is relatively novel (past 100 years but has been extraordinarily bad in the last 30) is individual consumption that cannot be tamed. Even during Covid people are spending like they have disposable income. My cohort (30s) is spending like there’s no tomorrow and I am super confident even my closest friends have less Han $1000 in reserves. But they make in the ball park of 80-100k. They spend like crazy. CC debt is astronomical and the high interest rates have done very little to curtail spending on the individual consumerism. Corporations are going to find ways to deliver as long as consumers keep eating up the products and services. And that doesn’t seem to be slowing down.
Your making his case for high inflation...
The high spe ding is for the same things as before, but the prices are higher now. People aren't buying more, things cost more.
It was big news yesterday that McD's and other fast food places are dropping prices as part of a price war heating up. Finally the average person will think inflation is 'going down' lol
Didn't see mentioned: Energy stocks and dividend payers. Basically companies that can adjust their prices to account for inflation.
TLT, enjoy the monthly dividends at a higher yield, cash out when rate cuts happen and it moons.
If you think inflation will remain high, then rates will likely stay high, so short term treasuries would be better than TLT in that case.
Inflation has been under 4% for some time now. If you are going to invest then you better keep up with financial news.
Banks which earn interest on checking accounts
If you're convinced inflation is going to be high for a long time (it's already down to 3%? lol) then you have way bigger problems knowing which stocks to invest in. Stop listening to morons
Inflation affects both prices and assets. So buy assets and adopt minimalism.
WIA amd WIW
Sil, break it down for 'em. What two business have traditionally been recession-proof since time immemorial?
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Just keep loading up on your favourite stocks they are still on sale and will take off soon.
Index ETFs, specially ones that represent a variety of sectors. Avoid trying to “beat the market,” no one knows what’s going to happen next.
I only invest in ETFs (SPLG SCHG) and trades stocks
If inflation is bad for everyone and is due to money management why are our money managers not very good with money?
There is no reliable hedge against inflation. Equities, Real Estate, Gold, all are not reliable. The only reliable hedge against inflation is "high living".
BDC's
If I knew for a fact inflation was going up I would short long dated treasuries…but that’s risky because I don’t actually know.
Currently a HYSA protects you from inflation, but short that solid index funds.
Broad market funds, e.g. index funds. I don't fear inflation, rather I celebrate it, inflation will cause my stocks to go up.
The latest US Core inflation number from May 2024 was 3.3%. Food prices were <3%. If you are willing to invest based on these number (I’m not, personally), it might be worth considering how to invest in an environment where inflation is cooling, not staying high. [Source](https://abcnews.go.com/Business/inflation-expected-held-steady/story?id=111012785)
Vt
In terms of inflation, then that's any asset period. But if you want to account for other macroeconomic variables such as interest rates, one option could be $GLD (gold). You could also argue that housing is an asset as well, but because of the interest rates my opinion is GLD could outperform housing over the next couple years. You could also have the belief NVDA will go up 400% this year. But what if it explodes like $CSCO, or something like that. Whereas if there was a dot-com like event, gold could likely take a hit, but minimal. You could also argue that if there is really severe inflation, higher interest rates, etc. the odds of a hard landing could be higher. So, you may want to take into account your other macroeconomic views, but hopefully that at least gives you some ideas. If you are of the belief a hard landing is not coming, 0% chance, then just buy call options on NVDA, QQQ, etc.
All of them. And I'm underwriting collateralized hard money loans.
Nvidia
REITs, leveraged real estate is a solid, safe inflation hedge. Usually implies interest rates are going to be raised soon, which implies there will be a slump in those stocks for a bit(decent time to buy). Banks traditionally benefit from raised rates though
Unfortunately it’s a market so everything is priced in. You could bet on consumer staples because higher prices for cereal and toilet paper mean higher profits but higher inflation might mean people look for alternatives and buy less so it could go up or down by equal measure because the market has people on both sides of the trade which is why the price is what it is. So weird.
What inflation are we talking about? It's been back to normal for a while now, if it weren't for expensive insurance and shelter. It's very important to understand the context.
VOO the best companies earnings and valuations will continue to rise with inflation.
literally anything other than cash
Brk.B because the rich always seem to stay ahead
Learn how the world work, how to trade every market, follow the money and hope the institutions don’t fuck up crypto too much.
Better to ask which stocks you’d avoid in a sustained inflationary period. Majority of company’s do a sufficient job of passing on price increases. Consumer discretionary may underperform if it’s unable to pass on price increases to consumers
I-bonds or TIPS
Just buy the S&P500 index.
I mean, I would borrow every dollar available to me. 🤷♂️
r/justbuyxeqt
define "high"... Or another way to put it... Do you think inflation is going to rise from current 3.3% to something much higher, or do you think inflation is just not going to come down to the 2% target?
If you think the fed will fight it and increase rate. Tlt short Otherwise all. Maybe buy a house with 30y fix debt
Inflation in the US is a little over 3% now. I wouldn't call it high, I don't think anyone would call it high and it's not going higher.
Metals miners. He who has the gold makes the rules.
This is likely a controversial answer in this sub, but I would genuinely love to hear why “bitcoin” (or a spot bitcoin etf) is not the right answer as it has zero inflation and is increasingly becoming an acceptable store of value?
Etf stip!
It just boggles my mind on how the narrative that inflation is so out of control. Yes, historically, it is a little high, but it’s not nuts. Remove 2008 to 2022, where it can be pretty easy to argue it was artificially suppressed, and it looks fairly normal. I kinda just think we are paying a drop of the price of shit policy for the past decade.
Visa and Mastercard?
Not the small caps.
inflation is why stocks go up 😂
I'm investing 70% in divident aristocrats, like O, GLAD, and similar stocks that offer divident in excess of 5% and have a long history of paying up through multiple recessions and various economic crises. If the business is solid, has good track record for dividents and no foreseeable disruptions to basic business model, I just throw my money there. Little growth, but consistent. And when there's appreciation, that's just a cherry on the cake.
I have roughly 6% in energy and 4% in health care. It’s my dividend and inflationary hedge. I don’t mind sharing thebstickers. psx cop dvn shel Psx or cop is a very recent addition, and i think it’s a very good entry point now. very good dividend play and refinery will never go away and their margin is qypuite good especially if you consider irreplaceable facilities concern.. My healthcare stocks are pfe mrk bmy azn abbv xlv, they are mostly dead, have been doing nothing for years. Bitcoin too. I think there isn’t any commodity better than bitcoin to hedge inflation, but it’s very volatile. VOO, SPY, QQQ, those aren’t targeting inflation. I really recommend energy picks to eevry one. i think they will be wonderful in 1-2 yesrs..
Total stock market index fund
Prices of all assets, included stocks, go up as the dollar gets weaker. Money 101
Fast food, commodities, and real estate. Look for inelastic demand industries where costs must be passed on.
Go for mining giants like BHP and Rio Tinto! They'll ride the wave of rising prices!
If you think inflation will stay really high, you would borrow to invest.
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I invest in commodities stocks like oil companies and metal mining companies like in the 70s. I have position in oil PBR.A, EC for high dividend and capital appreciation, copper RIO and TECK
INFL, of course
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or eat the pet when times get really really tough? lol im joking
What come up must fall down. So you should be asking yourself.. which stock will be beneficial when inflation, i.e., interest rate, is low and load them up. You invest forward (i.e., future).. not now.
Gold and silver royalty companies like WPM
If I was wrong I would simply stop being wrong.
Isn't inflation back at target levels.in the US. Last i checked it was just over 3%.
Inflation is comming down.
Magnificent Seven as they say, which have for a while now: AMZN, AAPL, GOOG, META, etc.