June 10, 2021, 1:30 pm EDT
Inflation Era Coming
It is not easy to know how hard to deal with the inflation era because we were not there during 1929-30. Maybe some of us went through 1980 who may know a little bit about Fed interest rates went to 20%. Well, it is time to prepare for it as the Consumer Price Index CPI reaches 5%, according to the US Bureau of Labor Statistics.
Pay attention to the featured chart we notice that last time (2008 Summer) CPI rose above 5%, recession followed it. It was the result of Fed policies of so-called affordable housing or sub-prime mortgage. Housing prices shoot up to the sky from 2001 to 2007 with more than +20% gains every year. It sounds familiar to us now when I check our housing prices today.
Artificial low-interest rates, numerous rounds of stimulus, trillions of infrastructure projects, are the formula to let policymakers and people happy for a very short period.
There are few ways to protect your investment:
- Commodity in energy: oil, natural gas, alternative energy (ex: solar)
- Commodity in basic material: steel, copper, etc
- Precious metal: gold, silver
- Food: chicken, cow, processed food, package food
The stock markets still rise today with this news but the end time for this record 12 years old bull is near the late-cycle. Be prepared.