The Federal Reserve signaled, at the conclusion of its two-day meeting yesterday, that Fed bond purchases could soon start to taper due to continued inflationary pressures. We anticipated this action and said so in several of our social media communications. This will cause bond prices to fall significantly, and we would encourage non-SFA folks to examine their bond holdings, realizing that those bond holdings are very likely to experience significant price declines – both short, intermediate, and longer term.

In our December 31, 2020, video, posted to all our social media accounts we stated, “We believe interest rates will increase in 2021 (pushing down bond values), but that the equity markets will remain strong.” Federal Reserve Chairman Jerome Powell has repeatedly called the current inflation spike “transitory.” But, OUR FIRM STRONGLY DIFFERS. INFLATION IS DEFINITELY HERE TO STAY. You can’t throw a gas can (excessive monetary/fiscal stimulus) onto a bonfire (the U.S. economy) and NOT expect it to blow up!

We also stated in our August 10, 2021, social media post that, “SFA’s view is that our country has already entered a likely decades-long period of higher inflation pressures…But – higher inflation, which is extremely destructive to bond investors, will actually result in higher inflation-adjusted earnings for equity investors! In other words, higher inflation will push your stock values upwards.”

Folks, our portfolios are uniquely, and carefully structured to ensure that rising interest rates and inflation should not harm your portfolio! Your SFA portfolio is positioned to actually benefit from continued inflationary pressures! Onward and upward!

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