Inflation Tsunami
Inflation Tsunami
Tsunamis have been prominent in the news lately. These devastating natural disasters start with powerful undersea earthquakes. A swell of fast-moving water ripples out from the quake, and some of those ripples move toward land. By the time the swell reaches land, the momentum of that water pushes giant waves out of the ocean. The waves rush inland, destroying everything in their path. Clearly, you don’t want to be caught in a tsunami.
Keep this image in mind, think for a moment about another scary phenomenon: inflation. A lot of people see inflation as just another force of nature to be feared – like tsunamis. But here’s something to think about. There are early warning systems that detect the early signs of tsunamis. Those who hear the warning sirens gain several precious minutes of time to get to high ground before the tsunami hits. Are there warning signs we can be watch for so we will know when an inflation tidal wave is getting ready to come ashore? Absolutely.
When the Fed fires up the printing presses and cranks out money for a couple of months, guess what – that’s an earthquake. A swell of fast-moving money starts rippling through the economy. The financial tsunami of inflation is on its way toward land. Or maybe a big steel manufacturer goes belly-up, and steel supplies will be tight for a few months. Anything made with steel is going to be expensive for a while – like cars and trucks. Anything that needs the use of trucks will be more expensive for a while – like shipping. Anything that needs to be shipped – you get the idea. A financial tidal wave is heading for land. The warning bell is ringing. If you don’t get your portfolio to high ground, then whose fault will it be when inflation hits and devours a few percentage points of your gains?
Plan ahead. If you live in a tsunami-prone area, have your escape routes planned. If you are investing in today’s market, and you see an inflation tsunami coming, there are ways to prepare. There are ways to hedge against inflation, and there are even ways to benefit from it.
Tags: inflation, john pollock, plan
