The US Labor Department reported Wednesday, that inflation accelerated at its fastest pace, since 2008, last month! The Consumer Price Index spiked 4.2% from a year ago, compared to the Dow Jones estimate of only a 3.6% increase. Over the past few years, inflation has been lower than the long-term inflation average rate, but is now rising due to economic ramifications resulting from excessive fiscal and monetary stimulus, pent-up consumer demand, and supply issues arising from the government’s shutdown of our nation’s economy in response to COVID-19.
As inflation rises, so does investor fear. But as always, our firm will not surrender to fear! We stated in our October 28, 2020 video, posted to all social media, that “Investor fear is why DALBAR, Inc. studies of investor returns, shows clearly that SFA clients receive approximately twice the returns of the average investor. Folks, that is because of our investment discipline. It is because we always put market fears into perspective, and never allow them to interfere with our proven investment methodology. We look at today’s markets in a pragmatic way, and we are certain that the path we are on will likely be highly profitable.”
From November 1, 2020, to May 7, 2021, OUR AVERAGE CLIENT ACCOUNT HAS APPRECIATED 53.04%*, net of all cost, compared to the Dow Jones return of 31.23%!
INFLATION SHOULD HELP OUR CLIENT’S PORTFOLIOS!
We see this inflation announcement, and the small downside market move, as a current buying opportunity to add to our holdings which are actually likely to perform even better with increased inflation and interest rates. We also stated in our October 28, 2020 video that, “Our portfolio has approximately 50% of its portfolio elements that are likely to appreciate more in a Biden administration – This includes our single most overweighted sector with banks. Due to the likely higher government spending, long-term interest rates would likely go up much faster under Biden, increasing bank profits and their stock prices. The significant seeds of economic growth that have already been planted in our economy, prior to a potential Biden administration, are likely to still move our portfolios strongly for a very long time in terms of your investment returns.” In hindsight, this October pronouncement was highly accurate!
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*Full listing of all disclosures (bit.ly/3lGX3mM)