One of the best ways to fight inflation is to follow the trend.
This is the conclusion of a research paper written by Henry Neville, a researcher on the Fence Fund Giants team, as well as the renowned Duke University Finance Professor Campbell Harvey. Human group EMG,
It is important to note, however, that it does not control the amount of money you spend.
From Archive (June 2021) Inflation is going to stay here, Professor with an unparalleled forecast
The paper was released in May but was mentioned in a blog post by Kevin Muyer, author of the macro tourist blog.
The Department of Labor reported that consumer prices rose by 5.3% in the 12 months ending on Tuesday, August, although the main measure has slowed since February. Read more in the August Inflation Report.
In the eight U.S. inflation regimes, the best asset was the energy commodity – the Arab oil embargo had a huge impact – but since then the trend has made up to 25% a year.
Moore put those findings into context. “If the wood is higher than the rocket, why is it difficult to own wheat? Of course, like most trends, stay tuned and stay longer. But who cares? “You can focus on the meat-big-expected movement,” he wrote.
Bonds, according to other studies, perform well during inflation. It’s really bad, Muyer said, “If you want to compete with inflation, it’s a way to shorten the bond. If not, buying tips works well enough, and is relatively, a big player. Tips are safeguards against inflation.
Regarding the shares, Muyer said the data reflects mixed performance. As inflation continues to rise from the baseline, stocks will be better, but inflation will continue to be negative for the stock. “Finally, inflation has to be treated with high interest rates. It was a point where stocks are no longer happy with high inflation. ”
At a time when the labor market is recovering and the Federal Reserve is not willing to raise interest rates on inflation, it may be different. “There are many different variables to consider when deciding how inflation will affect this cycle. It probably depends on how the bonds work, ”said Muyer.
S&P 500 SPX,
It got 19% this year. Product on the 10-year treasury TMUBMUSD10Y
Based on 41 points this year, and the future of the oil industry CL.1,
A.D. By 2021, they have gained 45%.