With the consumer price index increasing during the last few years at a rate not seen for nearly 40 years, the investing challenge for the coming year is finding ways to generate real returns during exceptionally high inflation. Traditional inflation-resistant assets include real estate, commodities and consumer cyclical stocks. Others, such as travel, semiconductors and infrastructure-related investments, may perform well during this inflationary cycle due to specific circumstances tied to the pandemic. Cash, bonds and growth stocks, meanwhile, appear comparatively less attractive in today’s environment. A financial advisor can help answer your questions and make recommendations on how you should diversify your portfolio.
Q4 2022 hedge fund letters, conferences and more
Inflation’s Ascent
According to Consumer Price Index data, throughout 2022, inflation rose by 8% monthly, on average, which is far and away the highest figure since 2000. While inflation is expected to ease during 2023, early returns this year are fairly similar. In fact, the same data shows a 6.4% inflation rate in Jan. 2023 to open the year.
Inflation erodes the purchasing power of cash and depresses returns on bonds. That poses a puzzle for investors aiming to protect their portfolios and stay on track toward their financial objectives. The pandemic’s economic impact provides some special challenges, as well as opportunities. With that in mind, here are the top investments for inflation in 2023.
Top 6 Inflation Investments for the Future
1. Equities
Equities generally offer a reliable haven during inflationary times. That’s because stocks historically tend to produce total returns that exceed inflation. And some stocks do better than others at fending off inflation. For 2022, equities of small-cap, dividend growth, consumer products, financial, energy, and emerging markets companies are showing up on many recommended lists. Also getting the thumbs-up are industries experiencing post-pandemic rebounds, particularly, travel, leisure and hospitality.
Read the full article here by Mark Henricks, Advisor Perspectives.
