I wanted to post a quick question today on how you are protecting yourselve against inflation? Many people are seeing this as the current biggest threat to their financial well-being.

So what should we be invested in?

Most investors would probably answer directly – Stocks! So is this a good answer?

Well yes and no! If we see a strong inflationary surge but with modest or falling growth, stocks would not be the best protection. One reason is that higher prices for companies could not be offset in higher prices fast enough and therefore we would see thinner margins.

There are two asset classes though that historically, since 1926 until today, has proven the absolute best protection against inflation. What are they? Inflation Linked Bonds (TIPS) and Commodities…

I think that we could agree on that looking at these two best performing asset classes in an inflationary scenario, most investors have no or very little exposure towards these assets.

So to my question: How much are you allocated towards commodities and TIPS? Please let us know by posting in the commentary box below.

Per Olov Jansson
CEO Cardea International
perolov.jansson@cardeainternational.com

 

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