Make money during stagflation

Make money during stagflation

Posted: BYMERANG Date: 03.07.2017

Join the NASDAQ Community today and get free, instant access to portfolios, stock ratings, real-time alerts, and more! The global economy can deliver a jolt to stock markets at any moment. These "Black Swan" events are hard to predict or anticipate, but are always on the back of our minds. Sometimes, we can even develop a vague sense that something is brewing.

For example, investors could sense that market trouble was coming in and , but the likelihood of trouble was so far outside of market sentiment that few were prepared. With central banks and investors around the world completely preoccupied with deflation, could rising price pressures be the next unexpected event for which you should be preparing?

The clues are all there and we may be in for a trend of low growth, high unemployment and increasing prices. That combination, last seen several decades ago, is referred to as "stagflation.

Disco Fever And The Great Stagflation The last time stagflation reared its ugly head, bell bottoms were all the rage and Richard Nixon was just starting his second term in the White House. Stocks typically provide a good hedge against moderate inflation, as companies can increase their prices to offset higher costs. As long as price changes do not increase quickly, management can forecast cost increases and build it into product pricing.

Faster inflation growth adds an element of uncertainty and corporate profits fall behind.

Add in higher unemployment and weak economic growth to create stagflation and companies might not even be able to increase product prices at the rate of inflation. Right now, that would seem to be of little concern.

Is there really any possibility to stagflation if pricing pressures are virtually non-existent? Yes, that possibility surely exists. Although economists have a pretty clear sense of projected GDP growth rates, they aren't in a position to project inflation rates: Bureau of Economic Analysis, Center for Latin American Studies Univ of Florida , International Monetary Fund, The Economist. Meanwhile, central banks have stepped up their policy of competitive devaluation.

With so much money being pumped into the system, we may be closer to faster inflation growth than you may think.

How to Invest in Times of Stagflation - Budgeting Money

Even as these central banks try to induce inflation in a bid to avoid outright deflation , unemployment levels remain persistently high in many parts of the world. In worst case scenario, these central bankers induce price pressures which would eat into corporate profits and stock prices even as they fail to bring down unemployment levels. That should lead investors to think about how various kinds of investments would fare in such an environment. Positioning For Low Growth And High Inflation Consumer staple and healthcare stocks tend to do relatively well during stagflation.

make money during stagflation

That's because consumers can't easily cut spending on staples such as milk and medicines. Larger companies can negotiate with suppliers for more favorable pricing and strong brands may be able to pass some prices on to consumers. These stocks generally pay a higher dividend yield, which also helps to offset inflation through immediate cash return. The Consumer Staples Select Sector SPDR ETF NYSE: Utilities are also relatively protected from a stagflation environment since essential services such as water, heat and gas are less likely to be cut from consumers' budgets.

The regulated price environment also allows for companies to pass on some of the higher costs. The Utilities Select Sector SPDR NYSE: The gold bugs have been spurned for nearly four years, but could soon be proved right.

Gold would perform well as a hard-asset, and also as a safe-haven investment on the debasement of global currencies and higher prices. Lower and more uncertain economic growth could drive more geopolitical risk, which would drive investors to safer stores of value.

5 Ways To Make Money This Summer! ☼ On The Internet

SPDR Gold Shares NYSE: One key area to avoid: Consumer discretionary stocks would take a stagflation-led hit as consumers cut back and retailers are not able to pass on price increases to customers. XRT holds shares of U. Consumer spending in the United States fell 0. Pricing pressures have failed to materialize six years after the global economic crisis, and deflationary risk is still the buzzword for some economists.

Investors may want to gradually position their portfolio for higher prices over the next year or two while avoiding stocks tied to consumer spending. Utilities and consumer staples both represent safety and strong yields -- a hallmark of The Daily Paycheck.

This newsletter focuses on putting dividend payers to work for you -- and your retirement. We, at StreetAuthority, have been so impressed that we urged her to spread the word to a wider audience. That's why, for the first time, Amy took the stage to explain exactly how The Daily Paycheck strategy works. If you haven't already, I encourage you to watch the exclusive presentation here.

You won't be disappointed. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Enter up to 25 symbols separated by commas or spaces in the text box below. These symbols will be available during your session for use on applicable pages.

You have selected to change your default setting for the Quote Search. This will now be your default target page; unless you change your configuration again, or you delete your cookies.

Are you sure you want to change your settings? Please disable your ad blocker or update your settings to ensure that javascript and cookies are enabled , so that we can continue to provide you with the first-rate market news and data you've come to expect from us.

Company News Market Headlines Market Stream. Economic Calendar Business Video Technology News. How to Invest Investing Basics Broker Comparison Glossary Stocks Mutual Funds. ETFs Forex Forex Broker Comparison. Wealth Management Options Bonds. Retirement Real Estate Banking Insurance. Saving Money Taxes Investments Small Business. Stock Ratings My Ratings Smart Portfolio Overview My Holdings My Portfolio Analysis Crowd Insights My Performance Customize Your Experience.

Join Today Already a member? Stagflation Is Coming -- Prepare Now February 24, , Inflation In GDP Growth In Expected GDP Growth United States 0. Bureau of Economic Analysis, Center for Latin American Studies Univ of Florida , International Monetary Fund, The Economist Meanwhile, central banks have stepped up their policy of competitive devaluation.

This article appears in: Investing , Investing Ideas , Stocks. The 4 Key Traits Of A World-Class Stock This Indicator Makes Value Investing Obsolete A Simple Way To Invest In The World's Least Volatile Stocks. Related Investing Ideas Articles. Most Popular Highest Rated. AMZN Is Up Sharply After Whole Foods Acquisition Snap's share price sinks, trades just above IPO price. View All Highest Rated. Research Brokers before you trade. Visit our Forex Broker Center. Find a Credit Card Select a credit card product by: Bad Credit Credit Quality Average Credit Quality Excellent Credit Quality Fair Credit Quality Good Limited or No Credit History Personal Loans.

How to Survive Stagflation – With a Profit in Your Pocket

American Express American Express Airline Cards American Express Business Cards American Express Cash Back Credit Cards American Express Charge Cards Barclaycard Capital One Capital One Cash Back Capital One Fair Credit Capital One Miles Capital One Points Capital One Prepaid Credit Cards Chase Citi Credit Cards Discover Discover Cashback Discover Miles Discover Student Credit Cards MasterCard Credit Cards U.

Bank USAA USAA Savings Visa Credit Cards. CLOSE X Edit Favorites Enter up to 25 symbols separated by commas or spaces in the text box below. CLOSE X Customize your NASDAQ. CLOSE X Please confirm your selection: Why Alphabet's Waymo Is Leading in Self-Driving Cars Alphabet began its self-driving experiment as early as Update Clear List CLOSE X Customize your NASDAQ.

If, at any time, you are interested in reverting to our default settings, please select Default Setting above. If you have any questions or encounter any issues in changing your default settings, please email isfeedback nasdaq.

Rating 4,6 stars - 869 reviews
inserted by FC2 system