Do you care about inflation?
It’s dominated headlines all year.
And the price jumps are hard to ignore.
The Consumer Price Index (CPI), which tracks prices of everything from groceries and used cars to health care and gasoline, rose 6.2% year over year in October. It’s the highest jump since December 1990.
But investors don’t seem to care … not yet, anyway.
Wednesday’s CPI report triggered a small sell-off, but investors jumped right back in on Thursday. Major indexes are still hovering around all-time highs.
Like everything in financial markets, we can’t predict future inflation.
The best we can do is position our portfolios for the greatest benefit.
And chief investment strategist Adam O’Dell has shared valuable insights.
Here are two ways to invest as inflation ramps up.
Inflation Option No. 1: Hedge
Figuring out inflation in the post-COVID stimulus world is a tall task. Maybe you’ve read headlines similar to these in the past few months:
- “Inflation Shock Tears Up Trader Playbooks From Stocks to Bitcoin”
- “S&P 500, Nasdaq stage rebound after inflation-driven sell-off”
- “Most Americans Are Afraid Of Inflation”
Inflation cuts into the purchasing power of every dollar you spend. So it makes sense to commit a chunk of your portfolio to hedge against that.
You could invest in classic inflation hedges such as gold. Cryptocurrencies like bitcoin are a popular option as well.
Adam suggested another avenue earlier this year: commodities.
Now, buying actual commodities is a logistical nightmare. You have to worry about storage, shipping and finding a buyer when you want to sell.
But we can buy exchange-traded funds (ETFs).
Adam calls this the “commodities bull market.” And with supply chain issues and inflationary concerns, he thinks we’re making a big mistake if we avoid commodities for the next couple of years.
The Invesco DB Commodity Tracking Fund (NYSE: DBC) provides easy exposure. Since Adam wrote about it in June, DBC is up over 12%.
That beats the S&P 500’s 9.4% gain in the same time.
DBC offers long exposure to a broad selection of commodities futures contracts across heavily traded markets including energy, precious metals, industrial metals and agriculture.
With supply chain issues, and inflation still being a top concern, I don’t think you can go wrong hedging with DBC.
Note: This fund is registered as a commodity pool. You will receive a K-1 form for tax purposes. If you aren’t a fan of extra tax forms, DBC may not be for you.
Inflation Option No. 2: Ignore
Ignore inflation is a little tongue-in-cheek. I know it’s a top concern for many investors.
But major indexes are going up, and even Wednesday’s CPI bombshell wasn’t enough to curb enthusiastic investors for long.
Inflation is on our radar, sure. Adam and the rest of the Money & Markets team are keeping a close eye on it.
We also know this is a record-breaking bull market. Participating may be your best bet against inflation right now.
Adam recommended an energy stock in his premium research service Green Zone Fortunes that’s up almost 70% since March.
It’s outside of his buyzone now, but 70% wallops all but the most extreme hyperinflation!
As you can see in the snapshot below of Adam’s model portfolio below, his recommendations are on fire! These include oil stocks, biotech, tech, consumer staples and more.
By joining Adam in Green Zone Fortunes, you’ll get everything you need to thrive, no matter the market or inflation conditions. And you’ll be the first to know when it’s time to make a move.
On top of the highest-conviction stock recommendations every month, Adam will provide guidance on the best times to buy and sell.
If you want to take the guesswork out of the inflation game, click here to watch Adam’s “Imperium” presentation and find the details on how to join Green Zone Fortunes today … for under $4 a month!
Assistant Managing Editor, Money & Markets
P.S. We’re curious … do you care about inflation? Send an email to Feedback@MoneyandMarkets.com to let us know. We like to tailor our stories based on your interests! If you want more inflation-fighting ideas, we’ll keep them coming! If other topics interest you more, just reach out to tell us what they are.