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Forgotten By Some, Inflation Is Far From Gone

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In an article for InvestmentNews, Rusty Vanneman reminds investors to be mindful of inflation. The reason being is that, although inflation has been a non-issue for the last several years, there are some signs that inflation may be starting to return. The Core Consumer Price Index (Core CPI) is nearing 2% year-over-year growth, ignoring food and energy prices. Rising home prices and wage growth are further indications of coming inflation.

Vanneman points out that successful investors must generate long-term returns that outpace inflation. He also offers examples of investment vehicles that, typically, perform better during inflationary periods. They include:

  • Mutual funds or ETFs that focus on “real assets,” such as commodities, natural resources stocks and real estate.
  • Emerging market stocks
  • Short maturity, high yield or inflation-linked bonds

For more information of those areas that, historically, have done better during inflationary periods, here are some articles from the AAII archives:

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2 thoughts on “Forgotten By Some, Inflation Is Far From Gone”

  1. Aside from food and energy, I have seen increases in many ordinary costs over the past several years. While food and energy may not be included in the official computation of inflation those are non trivial costs for all of us so the comment “inflation has been a non issue for several years” is simply not true

     
    1. Donald,

      I fully agree. While the “official” definition of inflation makes it appear to be rather tame, paychecks don’t go as far as they did several years ago. I really see that as the Treasurer of my condo association. Utility rates keep going up and the fees charged by contractors definitely have been going up at a rapid rate.

       

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