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The Real Story On Inflation: How It Affects Your Portfolio



  • There will always be a tug of war between inflation and deflation.
  • Neither, when moving both slowly and to a limited extent, will arouse a surfeit of fear and loathing.
  • Good luck finding that golden mean.
  • Here is where we stand today and the effect it has on your portfolio.
  • This idea was discussed in more depth with members of my private investing community, The Investor's Edge®. Learn More »

Inflation or regulation symbol. Businessman turns cubes and changes the word inflation to regulation. Beautiful yellow table, white background, copy space. Business, inflation or regulation concept.

The too-close correlation between the two

Dzmitry Dzemidovich/iStock via Getty Images

“Inflation is caused by too much money chasing after too few goods.” – Milton Friedman

Thomas Sowell once wrote of Milton Friedman, one of his professors at the University

This article was written by

Joseph L. Shaefer profile picture

Joseph L. Shaefer is a geopolitical, economic, and resource analyst. He is a retired military Flag Officer with deep experience in Special Operations and Intelligence, a former professor, and is today the leader of the investing group

The Investor's Edge

His approach to investing is universal. " There is a time for everything and a season for every activity under the heavens." He does not blindly invest in Growth, Aggressive Growth, Value, REITs, Tech, or anything else. Those who "specialize" in a particular area will live and die (financially!) on that one approach. Instead, he reviews each of the 11 Sectors that comprise the S&P 500 to find the best investments across all sectors for a balance between Growth, Value, and steady Income. Features include the Growth &Value sample portfolio, 5 decades of experience, 3 to 4 articles monthly exclusively for subscribers, and access to Joseph and his community in a chat arena that is reviewed daily.

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of TBT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Unless you are a client of my portfolio management firm, Stanford Wealth Management, I do not know your personal financial situation. Therefore, I offer my opinions above for your due diligence and not as advice to buy or sell specific securities.

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Comments (7)

Matthew Brown profile picture
Thanks for the great, common sense explanation. I agree with you. The biggest risk of recession now is Western governments tightening too fast. It takes time for interest rate hokes to show their effects. Best to take a measured approach than try to make up for lost time due to their earlier inflation miss.
Joseph L. Shaefer profile picture
@Matthew Brown -- Thank you. A voice of reason!
Angelmarauder profile picture
Random comment: Supply side economics hasn't been a strong indicator for a couple hundred years. Most products and services could supply to the full market 100% and are capable of being ramped up very quickly. Scarcity is a rare market now. The exception is on the margin, as usual, in skill and complexity.
Joseph L. Shaefer profile picture
@Angelmarauder, thank you for adding to this discussion!
auto44 profile picture
@Joseph L. Shaefer Truth usually shows up in simple terms. Thanks Joseph, for another sample of this.
Joseph L. Shaefer profile picture
@auto44 -- Thank you. I strive to speak plainly, particularly on big secular issues like this. Regrettably, too many -- most? -- investors just want to read, "Buy this!" or "Sell that!"
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