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Market & Portfolio Review: 10-21-21

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Making Money Off Inflation

In this week’s edition of the Market & Portfolio Review, we discuss how to identify and invest in companies that have the power to thrive in an inflationary environment. After 35 years of disinflation and deflation, the global economy appears to be entering a sustained period of reflation, accompanied by rising prices, capital expenditures, and higher interest rates. As prices rise, cash becomes trash, so as opposed to fearing inflation, we want to identify and invest in companies that will benefit from rising spending as consumers and companies seek more productive uses for their cash.

In a reflationary environment, cheap value stocks that benefit from rising economic activity tend to outperform expensive growth stocks. Within value, commodity and financial stocks are positioned to benefit from a broad global reopening while also having the pricing power to thrive in an inflationary environment.

Key Takeaways

  1. The shift to value may last years, not months
  2. Energy and financials appear to be leading the shift to value
  3. A weakening Japanese Yen may accelerate this shift 

The information here is presented by licensed professionals and not specific to any individual’s personal circumstances. Investment advisory services offered through LifePro Asset Management, LLC, a registered investment adviser. Investments involve risk and are not guaranteed. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy will be profitable or equal any historical performance. Discussion of any specific stocks are based on objective, non-performance criteria and such discussion neither serves as a recommendation nor as the receipt of, or a substitute for, personalized advice. Due to various factors, including changing market conditions, such discussion of positions and/or recommendations may no longer be reflective of current position(s) and/or recommendation(s). Moreover, no client or prospective client should assume that any such discussion serves as the receipt of, or a substitute for, personalized advice from Advisor, or from any other investment professional. Forward-looking statements such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” are based on management’s views and assumptions at the time such statements were originally made and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. LifePro Asset Management does not undertake any obligation to correct or update any forward-looking statements on the LPAM Site.

Robert Reaburn

Robert Reaburn

Robert Reaburn is the Executive Vice President and Head of Wealth Management at LifePro Asset Management. He works with financial advisors building diverse financial portfolios that best empower their clients with a lifetime of financial security.

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