Inflation: Your Move

I’ve sounded the alarm on inflation for months. Back in July, inflation had increased at its highest rate in 13 years. Then on Wednesday, the Dow dropped 200 points on news that inflation had jumped by the highest rate in 30 years.

​​Economists and policymakers have been trying to downplay inflation for months – assuring the public that inflation would be in check. They were wrong.

Inflation is now officially out of hand.

​​If economists and politicians were so good at predicting the economy, they’d be ultra-wealthy – sipping cocktails on the beach somewhere – instead of living off the taxpayers’ and lobbyists’ dime. Even after Wednesday’s scare, economists are still cautioning against drawing too much from one month of data, good or bad. Others in the public eye are less optimistic, with some warning that inflation will stick around a lot longer than anyone anticipated.

The moral of the inflation story is that you should never trust the advice of economists and policymakers and should be proactive in protecting your assets. The economy has just called “check” on all Americans. What’s your next move in this chess game? Will, you sit there like a duck and have inflation wipe out your assets like millions of Americans have done in the past, or will you take active steps to protect your family’s well-being.

As the drop in the Dow on Wednesday demonstrated, the stock market does not respond well to inflation. Why?

​​Because the typical Fed response to inflation is to raise interest rates to slow growth. Higher interest rates mean higher borrowing costs, which translates to less business spending on growth capital and less consumer spending using credit cards. The result is slowed economic activity, lower bottom lines, and lower stock prices.

A portfolio heavily allocated to stocks in an inflationary environment is financial suicide. If you want to know where to allocate to protect yourself, look at where the ultra-wealthy put their money in times of inflation.

To insulate themselves from the effects of inflation, the ultra-wealthy leverage inflation instead of letting inflation take its toll. Inflation hits the average American where it hurts most with greater price hikes for groceries, gas, cars, housing, and just about everything else we need. This should be a clue as to where the ultra-wealthy put their money.

To counter the effects of inflation, the ultra-wealthy invest in cash-flowing assets that stay in lockstep with inflation.

​​In inflationary and recessionary times, consumers will avoid luxuries in favor of the necessities due to diminished economic resources. The owners of and investors in assets considered essential like cash flowing housing – where rents rise with prices – or companies that provide essential services or products like food – with prices that coincide with inflation – are the best equipped to insulate themselves from the effects of diminished buying power.

Inflation is not something you should wait and see before making a move. You wouldn’t avoid the alarms of an impending hurricane, so why ignore the alarm bells being sounded over inflation – alarms that are getting louder and louder?

​​History has taught us that the investors who prepare for inflation will be spared from economic disaster. Wall Street and crypto barons want you to keep your money in their markets to keep them rich, but don’t go along with the masses.

​​Follow the ultra-wealthy who are allocating to inflation-resistant assets and not stocks and crypto.

 

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About the author

Kyle Jones is a co-founder and Key Principal of TruePoint Capital, LLC. Kyle is responsible for the company’s strategic planning, investment decisions, asset management, and overseeing all aspects of the company’s financial activities, operations, and investor relations.

Kyle obtained a Bachelor of Science degree from Texas State University – San Marcos, where he also played Division 1 Baseball.