As Inflation Gets Hotter, Your Profits Can Go Higher
The data is undeniable: With newly released statistics from the federal government, it’s clear that inflation is a here-and-now market force. The question is, how long will it stick around?
The answer, according to Sean Brodrick, senior analyst and editor of Wealth Megatrends, is that higher prices will be a fixture for quite some time:
“The Federal Reserve thinks this is transitory. The Fed says this is all going to go away by the end of the year, that this is all very short-term. I believe the Fed is wrong.”
Researcher and new Weiss Ratings stock analyst Sam Blumenfeld adds,
“It could last an extended period of time, especially when inflation is incentivizing interest rate hikes. But the Fed doesn’t currently want to raise the rates because that would have a crunch on everything.”
In this special six-minute video segment, Sean and Sam delve into the underlying causes of inflationary pressures and how to capitalize on stocks that are leveraged to them.
I’m not saying that we’re headed for disaster; I’m just saying that the odds of something running off the rails increased. So, the Fed has to maintain control of this. They have to work with Congress to make sure that inflationary pressures really don’t get too hot.
Because one of the big problems is there’s so much free, or near-free, cash floating around the system ... and it’s chasing a finite amount of goods.
There’s certainly great potential and great opportunities. You just have to really separate the long-term trends from the short-term shocks and use that to your advantage. You want to invest in things that are going to ride the inflation wave. We put people into funds and stocks that should do well.
Sam focuses on a significant market shift:
I think we’re already beginning to see the shift from growth to value [stocks]. You’ll see that in valuation models, when high growth companies or tech companies deal with higher discount rates, their valuations become more crunched. And I think that’s a big factor between the shift from growth to value.
We’ve seen success recently with sectors that are being driven by megatrends. And specifically, the ones for us that have done well are the ones that have been more value-oriented, where we picked them up very cheap. And with the sectoral tailwinds coming from (President) Biden’s infrastructure plan, we were able to capitalize nicely.
In this insightful video, Sean and Sam discuss:
• Which sector is currently driving the uptick in inflation.
• The sector that will soon experience a “price squeeze.”
• Stocks with “nice risk-reward ratios” in this inflationary period.
• The one factor that could trigger the Federal Reserve to shift its monetary policy.
The information in this short segment couldn’t be timelier. I suggest you watch it now.