As the proverb goes, “May you live in interesting times.”
This certainly isn’t being wasted on us.
The war in Ukraine has lasted longer than most have expected. The world came together with sanctions against Russia, but they have coalesced much better than anyone could have forecasted.
Plus, when it comes to your money, most of the experts failed to predict the 7.9 – 10% current inflation, with some commodities up by close to 40% year over year. The phrase out of Washington before the war started was “transitory inflation.”
Obviously, no one today believes this phrase anymore.
Inflation and Our Way of Life
First, the bad news. (I am always confused about whether I should present the bad news first with good news after, or vice versa).
Inflation is a hidden tax on all of us.
It erodes spending, makes us change our purchasing patterns, impacts driving and our vacationing. It also alters the food we eat at restaurants or even how often we will now go out. Accordingly, at the end of the day, this will slow down consumer purchases. This is very unhealthy for the overall economy.
Inflation on Tech and Growth Sectors
Furthermore, since October the Tech and Growth Sectors experienced major corrections with some well-known and profitable companies dropping by up to 50%, affecting all investors. For the moment, this seems to have abated. Increasing inflation will ultimately raise interest rates, further tightening the bond markets while putting pressure on the Tech Sector, America’s great gift to the world.
Here are a few examples of today’s inflation pressure on everyone in 2021 vs 2020.
Beef and veal have increased by 20.1%
Oil has increased by 67%
California’s regular gasoline has increased by 58%
Milk prices have increased by 19%
Refrigerators have increased by 10%
New cars prices have increased by 15%
So, what’s the good news?
History has taught us that inflation is temporary. The Federal Reserve is working on putting a lid on inflation, which doesn’t happen quickly. We still have a roaring economy with more job openings than people to fill these jobs.
The desire to plan and take a vacation this summer is still strong in our families. Sectors, such as Technology, are still growing, and we are shopping online more than ever before. Golf courses are still thriving, which means there is still plenty of disposable money available.
We continue to be bullish on America. Of course, always with caution.
We are watching sectors very carefully and with precision, finding opportunities for our clients. We fully understand the economic pressures of inflation and commodity shortages that still exist. Today is a great time to invest in long-term opportunities, albeit a bit painful to watch.
We look forward to hearing from you.
Let’s set up a Zoom meeting to review what you have and the opportunities we see available for you.
All my best,