Monday, January 30, 2023

Investing in equities to combat inflation

Must Read

Investing in raw products produced at the front end of the supply chain is critical during periods of high inflation, in my opinion.

Have a look at this…

main qimg 00f8d083961354bad5852849ff049478 pjlq

This is because when we go to the supermarket to buy apples, for example…

main qimg 7c4e3b110d2c26336db0ba6415d6949e lq

While it may not cost the farmer more money to grow apples (assuming he owns the land), the farmer (let’s call him Abe) would want to raise the price of his apples when selling them to the distributor (let’s call him Bob) who is responsible for getting the apples to the grocery store during times of inflation.

Because Bob paid significantly more for Abe’s apples than he did before, and because fuel prices have increased due to inflation, he will have to demand more money from the grocery store in exchange for the apples in order to maintain the same purchasing power he had before and “breakeven.”

This chain has more middlemen in the real world, but I only want to offer a simple picture of why prices rise and why it’s crucial to invest in raw materials or firms that produce raw materials at the front end of the supply chain.

This is why energy and commodities outperform the S&P 500 during inflationary periods…

main qimg 4bc800f00b6be20a9a68f1924ed101b6 pjlq

Look at this now…

main qimg 45172638b57417034efceebd56ee017f pjlq

You can invest in stocks that produce particular commodities with supply limitations and rising demand, as these stocks tend to outperform the market.

Do you recall Abe the apple farmer? If you’re an accredited investor, you may use AcreTrader to invest in farmland… I’m not sure how you can get any closer to the supply chain’s front end than that!

See also  How to analyze stocks for long-term investment?

Take a look at farmland’s average annual return over the last 20 years…

main qimg ee81a9a685afdc00d6521d94f60bd9e8 lq

As a result, art is not only an uncorrelated asset class, but also a wonderful investment during periods of inflation…

main qimg c7c2c664aac1577479fa399b9addbaf0 pjlq

By the way, give this a thought…

main qimg 3d3c352c223cf6165a83d4a3ee69c40c pjlq

If I were you I’d…

main qimg a8245261672427511a2553a79d9f4d81
- Advertisement -spot_img

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisement -spot_img
Latest News
- Advertisement -spot_img

More Articles Like This

- Advertisement -spot_img