Something to watch if you are an investor.
The one key take away from this article…
- Avoid staying in cash: Inflation means your currency is worth less every day. Fight it by not staying in it if at all possible.
Powell about 30 minutes ago:
Fed Chair Jerome Powell: Fed Will Do Everything We Can To Support Economy For As Long As It Takes To Complete Recovery
- Inflation Has Increased Notably In Recent Months
- As Transitory Supply Effects Abate, Inflation Expected To Drop Back Toward 2%
Interesting thing is, the Bond Market’s action yesterday says it agrees with Powell. The yield curve flattened somewhat, which fits the expected economic direction and the eventual payment for bringing it about.
So buy all this stuff today, and sell it tomorrow and buy all this other stuff to cover all the bases. Keep doing that over and over.
I like it but I won’t do it. d:^)
Random thoughts: You don’t have a housing crash when you have a housing shortage and we have a big one.
Since bonds don’t produce enough at this time, I use preferred stocks. No tax advantage but slightly better after-tax yields.
I think we’re in for additional inflation if Biden gets his economic package.
I think the increases in price driven by reduced production last year while still getting increased demand are going to stick around if not continue to grow.
Despite my thoughts on inflation, I’m keeping some cash on the side as I expect that we have another significant drop in the market on the horizon. My plan is to do what I did last year to double my money. Wait for the drop to steady and then buy long dated SPY call options with the cash.
In the meantime the stock account stays invested in high dividend stocks of 6% or more+ selling call options on those stocks for additional income. Either I keep the stock and the option money or I get both the option money and the profit on the stock. Then I can buy back into the dividend stock on the next down day.
Outside of that I have some gold and silver mining stocks, a very few technology positions, and a very minor TIPS bond fund position.
2021 is nothing like 2008.
And that advice is generally but not completely accurate.
But forget deflation. The Fed wants inflation and they are getting it.