The ONE Investment Idea EVERYONE is Ignoring
Every few years there is an investment theme that affects every investment in your portfolio regards of what asset class. You could be invested in stocks, bonds, gold, real estate… It does not make a difference when a major investment theme (good or bad) appears.
A recent example occurred in the last few years when financial institutions around the world blew up due to overleveraging and creative investment products. The failure of several large financial institutions led to the worst economic recession in decades. Stocks fell in a manner not seen since the Great Depression of the 1920’s.
In 2007 when the S&P 500 was hitting a new all-time high the thought of a financial collapse was rarely discussed because investors get too wrapped up in the here and now. Looking out a few years and thinking outside the box with an investment theme that is not main stream is unheard of for most investors.
Investing in the S&P 500 over the last 10 years would have yielded you an annualized negative return of 2% per year. So obviously following the crowd is not the best investment strategy. It is time you think outside the box and consider the investment theme I am about to introduce to you.
INFLATION
Yes, I just said Inflation!
As most so-called market experts are calling for continued deflation, I feel the biggest investment theme to move the market in the coming years will be higher prices = Inflation.
When a government has the printing presses working 24/7 to pay for bailouts, pork, and whatever else they decided to spend the money on, the end result will be Inflation. There is no way around it and this time will not be different as the deflation pundits claim.
Reason Behind the Most Important Investment Theme of the Next 5 Years
1. The Washington DC Printing Press
- US Government has been printing money and lowering rates at the same time - suggesting to everyone that everything you buy is worth “more”. This is an illusion and at the same time the US Dollar is hitting fresh 15-month lows and there is no end in sight for the tumultuous decline.
2. The Federal Reserve
- The Fed has no exit strategy to get the country away from borrowing costs of 0%
- The Fed likes a little inflation, however this little inflation will eventually explode into hyperinflation
- Moderate inflation is the goal. Keep in mind that is always the goal, but how often has the Fed missed this goal in the past? Think 1973.
3. Booming Deficit
- We are at a record deficit - $38,000 per US citizen, more than ten times higher than it was a decade ago.
- Spending trillions on health care reform will only add to the country’s debt
4. The Numbers
- Gold at all-time high
- TIPS hitting a new year high
- Food prices steady increase
Invests to Hedge the Affects of Inflation
1. Commodities
- From May 1972 to December 1974 the Consumer Price Index (CPI) increased from 3% to 11%
Commodities (S&P Goldman Sachs Commodity Index) increased 222% or 55% annually versus a 12% annualized loss for the S&P 500 and a 5% gain for Bonds (Barclays Capital US Aggregate Bond Index)
- From November 1976 to March 1980 CPI rose from 5% to 14%
Commodities up 87% or 20% annualized; stocks up 5% annually; bonds up 2% annually
- From December 1986 to November 1990 the CPI increased from 1% to 8%
Commodities up 186% or 30% annually; stocks up 10% annually; bonds up 8% annually
- From July 2007 to July 2008 CPI rose from 2% to 6%
Commodities up 49%; stocks down 13%; bonds up 11%
2. Treasury Inflation Protected Securities (TIPS)
3. Short Dollar - Long Foreign Currencies
NOW is the time to Act!!
March 2009 is a great example how investors missed an opportunity of a lifetime. The financial media and nearly everyone around the world were concerned about the next Great Depression. Even with that being said you knew GE at $6 was too good to be true.
And you were RIGHT!! GE was up 100% in the next month.
The opportunity you had in 2009 to buy equities is the same opportunity you have with Protecting your Portfolio from massive Inflation that will hit the US in the coming years. Once you begin hearing about Inflation from CNBC and your co-worker - it is TOO LATE.
This is why you must ACT NOW!!
I have outlined a few areas that will protect your portfolio during a high Inflationary period, but to fully take advantage of the situation you MUST be invested in the proper STOCKS and ETFS.
This is where Penn Financial Group can help. We offer a Portfolio Management service in which we will build a portfolio tailored to your goals and risk level. OR you can take advantage of the Swing Investor Service which is for the more Active Investor.
The BOTTOMLINE is that you NEED to contact Penn Financial Group TODAY to see how we can help you Protect your portfolio against the upcoming Inflationary surge.
All it takes is a 5-minute phone call. Is your hard earned money worth the time? I sure hope so.
PLEASE CALL 1-877-383-7366
Have a great Thanksgiving,
Matt McCall
President, Penn Financial Group
Author, “The Next Great Bull Market” and “The Swing Trader’s Bible”
