Best Sectors For High Inflation Investing
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- Äas pÅ™idán 19. 06. 2024
- The best long-term hedge against inflation is equity, but within equity, some sectors hold up better than others during periods of high inflation. In this video, I look back in time to see which sectors these were as well as consider where we are in the business cycle because this will also affect our sector choice.
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Timestamps
00:00 introduction
00:32 Inflation Drivers
02:34 Investable Sectors
07:12 This Year
9:48 Long-Term Sector Performance
11:09 Periods of High Inflation
14:45 The Business Cycle
16:51 Conclusion
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All information is given for educational purposes and is not financial advice. Ramin does not provide recommendations and is not responsible for investment actions taken by viewers. Figures that are quoted refer to the past and past performance is not a reliable indicator of future results.
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In my experience it pays to be contrarian. If you buy cheap cyclical stocks during a recession period, chances are these stocks will rebound a lot when the recession is over. Just like it was very profitable to buy energy stocks during the covid period. Provided that you're making sure to buy these stocks very cheap (based on the average earnings over the whole cycle for example).
Antonmursid🙂✌ðŸ™ðŸ™ðŸ™ðŸ™ðŸ™ðŸ’žðŸ™
This was one of your best videos. Thank you!
You are so welcome @norvik voskanian
I've been following PensionCraft videos for two years I think, even though often they go well over my head. But this one, I really understood and it is so useful. Basic analysis like this is so useful for newer investors. Thank you.
Thank you @Conditiae I really appreciate that. Ramin
Thank you for these detailed, data-driven, almost academic presentations. Yours is second to none.
glad it was helpful @J H
I've been following your videos for a few months. I really appreciate the content and your analysis. I would like to thank you for your work and send greetings from Germany.
would love to see sector rotation video. since financial institutions have specific strategy based on World events. understanding what event affects which sector.
Great video.
My favourite part of the week is waiting for yours and Michaels podcast every Wednesday to listen to on my journey to work!!
Awesome! Thank you @stevie
i'm actually dollar cost averging into Tech and Com Dis because these are the ones that got hammered hard. Defensive sectors have still been or 'already' holding up well so I'm looking forward to 6-12 mths ahead of the cycle. The stock market is not the economy and the stk market always move 6-12 mths ahead of the economy.
Hello everyone, this was very good but if I may say a classic explanation. Being interested in History, I think it misses a few key points. Economic history moves on. In my opinion the ageing population contributes to inflation, as people retire or change what they did in youth, this drives costs, but of course creates demand in certain sectors. So for instance the wealthy retired buy more health care, so health care over the next 10/15 years will perform better than previously in certain countries and not only when the economy is wobbly. So healthcare is not just an investment for the short term. Secondly I well remember the reduction in costs caused by China industrialising. So for instance washing machines in the 1990s went down noticeably. But when a county developers it wages start to climb rapidly, this happened in China as would be expected. So effectively a lot of the inflation in the west was offset by chinas development. This period is now largely
over. The Chinese population ageing, and their wages having gone up.
Commentators rarely note the importance of demographics and the newly industrial countries impact on the world economies. It’s not merely a question of what is and has being going on in the west for a very long time.
High-value video! Data-rich and seamless presentation.
Glad you enjoyed it @Anthony Weitz
Another fantastic video, Ramin - thank you!
Glad you enjoyed it @Louis
Another excellent analysis.
All very interesting as always, but do you think that for a long term strategy (10y) is it best to invest anticipating a bit the cycle or pile up in the worst performer of each phase?
You do so a great work!!! Thank you for this great video. Thank you so much
Thanks for watching @palatinator
This must have taken a lot of time but it was so educational and informative and there was so much great content covered ty!!
Glad you enjoyed it @dhillion
I like your channel. Keeping to facts and not sensationalizing nonsense. It helps that your have the credentials to back it up! Good one mate.
I appreciate that @Anderson Cavill
Excellent video! Thank you!
Glad you liked it @gastonville11
Fantastic video as always!
Thanks again!
I thought about building my top 5 list of videos from Ramin. This video will definitely be on this list. This is super helpful. Thanks a lot.
Awesome! Thank you @msprinz100
Thank you Ramin! Great insightful video. I was wondering though about Gold price. In a recession the price goes up but when there is a rate hike the price goes down. Interestingly, we are in a situation where we are heading for recession and the rate will be rising for the foreseeable future. Is there any other point in history that we had a similar situation and how did gold perform during that period?
A recession should cause demand to collapse, therefore inflation will also collapse, at which point rate hikes will reverse?
As always, another excellent video by Ramin
I appreciate that @A R
Thanks Ramin, Ive been heavy utilities since last year in DNP and HTD. they have saved me from huge losses elsewhere but i keep hearing warnings that they may be the next shoe to drop. i know there is a lot of complexity with utilities and that when investing in them you are exposed to other types of financial instruments but would like to (and should!) learn more about this.
XLP and XLU recently dropped in the June sell off... this one they're dropping yet again and didn't really go up much in the bear market July rally.
I'm watching the last shoe to drop is XLE and XLV... XLE took a dip in June which has made me think okay... so watch XLV... that is the very last one... healthcare sector.
And sure enough XLV is dropping.
XLE is also dropping again.
It's the interest rates going up that causes ALL equities to drop.
He's kind of misleading to say equities do better in inflation... they don't.
Equities tend to do horrible because interest rates continue to go up which destroys equity... I Series savings bonds should be maxed out in the states... you can only buy up to $10K of those... currently paying 9.6% and easy to liquidate after a 1 year lock up period... they're non-trade-able so they don't lose par value you don't sell them on the market, you just redeem your money back and interest from the US Treasury... before 5 years of holding you lose the last 3 months of interest payment that would have been awarded. Compounds semi annually and pays interest quarterly. Sort of a no brainer during inflationary periods... but you can only put in $10K per calendar year... the rest of your money... good luck.
Bonds can be okay short term or long term to make some interest. Cash is good as you can DCA back into equities as they fall apart. If you're keen on trading shares and doing various trading activities cash is nice to trade the market. If not... just wait for a dumpster fire crash and you can trickle that money back into equities little by little.
Really, I started and now completely sold all my XLU individual name holdings... including an employee stock buy in program one.... they''re at their highs... it's like in December and January was a great time to sell your large mega cap tech names like GOOGL and AAPL at the top.
Hi @A.G. Smith defensive sectors acquitted themselves well historically during inflationary times. So that might be something else to consider? Thanks, Ramin.
Great as always, thank you Ramin. Hope you are enjoying your new house!
Thank you @Rafael F
Hi there, thanks very much for this. What do you think of European banks? They benefit from rising rates. And they are much better provisioned and less geared than previously due to tight regulations after the global financial crisis. And they have good dividend yields and low price to book and price to earnings ratios...? Many thanks
Such a fantastic video. Thank you
Glad you enjoyed it @TemptationJewellery
Thanks I found that very informative
Glad it was helpful @joseph Keegan
Good timing for this video ðŸ‘ðŸ»
Not really. Topical maybe, but the perfect timing was about 18-24 months ago, before the inflation started and before the markets priced it in.
This is a very helpful analysis, thanks ðŸ‘
My pleasure @Ivailo Ruikov
Great overview, thanks
Thanks for watching @Nick Clemishaw
Real Estate is an interesting one. I have a private REIT that has performed well, while public REITs correlate more with public equalities and haven't done so well. I also wonder how TLT will do in. a period like this and Silver. Will silver be the poor man's gold and track gold accordingly? Great work, BTW!
Thank you!
You are welcome @izwaterloo
Very Informative Video. I have a question, if you don't mind answering. When people cut back on consumer discretionary items at the time of high inflation, do businesses selling Gold Jewelry flourish, given the prices of gold start moving up, maybe making consumers attractive to gold products? Or, would these businesses also go down along with consumer discretionary sector because people don't want to spend money on non-essential items? Please respond.
4:00 Please use larger font in such graphs as screen resolution hampers legibility.
Great summary.
Thanks
Tips and very short inflation linked bonds are doing pretty ok at the moment for a change. Otherwise it's core, non volatile, blue chip dividend stocks in non cyclical industries.
Excellent video!
Thank you very much @Wilson Property
Is there an equivalent of Finviz for UK100?
great analysis. outstanding
wow thank you @Rob Weinberg
Truely excellent analysis.
Thank you @John Taylor
great video
very interesting
thank you
So nice of you @Brick Lawson
Doesn’t ‘high inflation investing’ really depend on the time horizon? Like accumulating the stocks in sectors which are now the least performing, but do well in periods with low inflation, let’s assume a couple of years from now. Basically meaning ‘buy low, sell high’?
Yes, I'm buying into growth sectors that have been severely hammered. Not too worried how they perform in the near future.
Volcker wasn't appointed Fed Chair until 1978 or '79.
To the point explanation
Thanks @Ajay P
Any idea what about inflation on packaging stocks?
How about Gold/Silver Miners and Metal Miners in general.. ? Especially now, which appears to be a very different time, considering the USD as the Global Reserve Currency is at risk by numerous countries (BRICS alliance). Are the Commodity Miners ( including Gold/Silver) on the verge of a price climb never seen before? Your opinion appreciated. AND Well done research. Thank you
Very informative
Glad it was helpful @Jon Andrews
MLP’s are a good way to get energy exposure with less volatility, great valuations and higher yields.
Excellent video ðŸ‘
Thanks for the visit @Paul Trew
thank you
You're welcome @Marty James
Are you going to take that plant to the new place? Thank you for the video
Hi @bran yes it's definitely coming. Thanks
Soo buy Tsla?
How to profit? Short the Qs until November, then update strategy.
The investors go-to has always been the S&P index fund.
But that is looking more and more perilous because it's reliant on just a few very big companies that are highly overvalued and also dependent on an increasingly politically and economically unstable US market.
It's time to diversify globally and reduce the dependency on US stocks . The good old days are over.
We are going to see alot of big names fail over the next 5 years.
11:08 Toys? They’re ESG nightmares?
During high inflation you don't drink to have fun. As the game cards against humanity teaches us:
You drink to forget
David Cameron
Does “disinflationary†mean deflationary?
ðŸ‘
Why is US inflation high when the dollar is so strong.?
Would have thought that this is a reactionary take on investing. Minimum timeline for investments would typically be 5+ years, and the investment strategy has to be able to survive through periods of high and low inflation. Speculating now on assets for high inflation could prove disastrous if later on this decade the inflation rate is low.
It's only reactionary if you keep selling everything and buying into other things to time markets. Re-balancing isn't necessarily reactionary, and who says a slump / bear cannot last 5 years?
From the Morningstar paper “Equities Start Month in Deeply Undervalued Territory After Latest Pullback’ by Dave Sekera dated Sep 6, 2022 (The data of August 31, 2022)
Sector P/FV 8/31/22 P/FV 9/6/22
CONSUMER DEFESIVE (STAPLES) 101%
UTLILIES 109%
HEALTH CARE 96% 100%
Do you think the prices/Fair Values of the three sectors will increase more when the inflation continues increases? I think it is too late to buy the three sectors that the prices already went up a lot when you publish this tube.
Now, it will help us if you publish the better sectors to invest before recover.
Pls. comments. Thanks, Kang
like the content and have Fav this, from a presenter point of view you have a listenable tone and cander but to be honest if your going to discuss a subject matter don't litter it with anything else stay on point, i was wanting more content about inflations sectors not what will can might occur during other economic cycles,, with other sectors please !
After a sell off, REITS will do well. They stop buildiing as rates rise, supply declines.
Is using Gold as a good example of something that performed excellently during the high inflationary 70's a fair example? Isn't that when the US came off of the gold standard?
IMO even if we enter a recession, certain materials will be in very strong demand due to decarbonisation efforts and countries like Germany/UK trying to get away from Russian fossil fuels. Copper demand will hold up, along with nickel, cobalt, lithium, graphite etc. They may see a downturn over the next 6-12 months but by the end of 2023, will be sharply higher.
Long commodities and energy it isn't over
That's it, I've told the kids no more fun
Fudge The Fed-Sap and Claw Elixir
Consumer staples and utlities are already overpriced. There is value in Healthcare. Gold has been a dog.
RIP Queen Elizabeth II
Time to shirt energies
No wonder people are turning to crypto. 14.6% apy on stablecoins
27.4% apy midas
Great video!
Glad you enjoyed it @LMHSim