馃捀 PORTFOLIO: INFLATION / STAGFLATION 馃捀
It may be too early to predict a lost decade any time soon. However, this could happen in less than 15 years. There are many phenomena that can suggest this hypothesis, such as:
- Geopolitical tensions changing the supply chain and global trade [ https://t.co/FS5o7iinIV ]
- Increase in Social Spending and State Interventionism to protect supply chains and counteract enemy influence [ https://t.co/oHorP7gn7G ]
- The possible phase change in interest rates associated with caused inflation [ https://t.co/rfvuugPyEZ ]
- Cycles of the US Stock Market [ https://t.co/aOYCvGIuKu & https://t.co/I9PHJy89NB ]
- Multipolarity in the power of nations that will redistribute the benefits of companies
In that sense, anyone should cover their assets with some instruments that can perform well. Below are 5 examples:
1. Bonds Market: Especially, Inflation-Linked Bonds (TIPS in USA) or Short-Term Bonds if the expectation is that inflation will gradually increase.
2. Emerging Markets: they are key because usually concentrate the commodities market, the problem is their currency that in any crisis, are going to suffer.
3. Gold: Because it may anticipate any inflationary wave or at least, being an asset with relatively lower risk [ https://jjplindex.blogspot.com/2024/04/gold-understanding-it.html ]
4. Strong Companies: They must have pricing power capacity in any sector, but also being oligopolistic or substitutes for expensive products and have buybacks programs.
5. Utilities: They are services on which governments and people depend for the development of the entire productive chain.
6. REITs: It goes well with prices increasing. The problem is that this sector might be the protagonist of the next crisis. It is complex to analyze it and the topic will be discussed in subsequent post. However, caution would be advised in the long term.
Finally, the graph shows the allocation in these sectors, based on 1 year of data, minimizing the correlation. This requires a longer period. However, the objective is only to exemplify and make any investor aware of future scenarios.
The best analysis is yours!
J. Joel Padilla
https://www.linkedin.com/in/joelpadilla/recent-activity/
- Geopolitical tensions changing the supply chain and global trade [ https://t.co/FS5o7iinIV ]
- Increase in Social Spending and State Interventionism to protect supply chains and counteract enemy influence [ https://t.co/oHorP7gn7G ]
- The possible phase change in interest rates associated with caused inflation [ https://t.co/rfvuugPyEZ ]
- Cycles of the US Stock Market [ https://t.co/aOYCvGIuKu & https://t.co/I9PHJy89NB ]
- Multipolarity in the power of nations that will redistribute the benefits of companies
In that sense, anyone should cover their assets with some instruments that can perform well. Below are 5 examples:
1. Bonds Market: Especially, Inflation-Linked Bonds (TIPS in USA) or Short-Term Bonds if the expectation is that inflation will gradually increase.
2. Emerging Markets: they are key because usually concentrate the commodities market, the problem is their currency that in any crisis, are going to suffer.
3. Gold: Because it may anticipate any inflationary wave or at least, being an asset with relatively lower risk [ https://jjplindex.blogspot.com/2024/04/gold-understanding-it.html ]
4. Strong Companies: They must have pricing power capacity in any sector, but also being oligopolistic or substitutes for expensive products and have buybacks programs.
5. Utilities: They are services on which governments and people depend for the development of the entire productive chain.
6. REITs: It goes well with prices increasing. The problem is that this sector might be the protagonist of the next crisis. It is complex to analyze it and the topic will be discussed in subsequent post. However, caution would be advised in the long term.
Finally, the graph shows the allocation in these sectors, based on 1 year of data, minimizing the correlation. This requires a longer period. However, the objective is only to exemplify and make any investor aware of future scenarios.
The best analysis is yours!
J. Joel Padilla
https://www.linkedin.com/in/joelpadilla/recent-activity/
Copyright: Joel Padilla 2024
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