Video: Is Your Portfolio and Retirement Safe from the Devasting Damage of Inflation?

May 15, 2024
  • Investors need to be aware that inflation damage compounds over time. We have undergone a secular change, and inflation will continue to move up over the medium term.
  • Inflation has slowed from its 9.1% high in June 2022, but it has reaccelerated to 3.5% from the 3.0% low in June 2023.
  • If you had $1,000,000 in cash in March 2021, the purchasing power of that would only be $848,445.
  • Federal government spending is out of control, which has continued to fuel inflation. Driven by increasing interest expenses and spending, we expect a $2 trillion deficit for 2024.
  • The Fed has been complicit. The balance sheet ballooned from $872 billion before the 2008 financial crisis to $8.9 trillion in April 2022. QT has made a dent, but it still sits at $7.4 trillion.
  • Nominal GDP, 10-year and 30-year Treasury yield generally move in tandem. Currently, interest rates are below what we would expect.
  • Own assets that will do well in an inflationary environment.
  • Stocks should do well. We like oil and gold stocks in particular, as they are well-positioned from a supply-and-demand perspective and are undervalued by the market.
  • We are avoiding any bond over 5 years in maturity. Inflation eats away at the value over time, and as rates go up, the nominal price of the bond is destroyed.
  • Cash-like instruments like CDs and T-Bills with under 1-year maturity are also a good choice.