Update - February 28, 2023

Up 30%… and Still Going

Go figure… inflation continues to roar. Whodathunkit?

We did. We thunk it.

For well over a year now, we’ve been saying that the Fed is well behind the curve on rate hikes. For the bank of banks to truly break inflation’s back, its benchmark rate needs to be north of 6.5%.

Historically, the Fed’s rate has always been higher than inflation… especially at the peaks.

The market still doesn’t believe the idea, though. Most folks are anticipating a Fed pivot. They’re guessing when Jay Powell will succumb to the pressure and flatten rates on his way to taking them lower.

It’s creating havoc in the markets.

Here’s a headline from the brainiacs at NPR…

“Despite high inflation, Americans are spending like crazy – and it’s kind of puzzling.”

It shouldn’t be puzzling… not at all.

Most folks are convinced price hikes are merely temporary. They believe the government can print trillions of dollars in new money and spend trillions more it doesn’t have… and the consequences will be mere ripples in the water.

It’s not true.

We will not see inflation subside until two things happen. First, waves of bankruptcies must rush across the economy, washing away the money that was created over the last three years.

We can’t simply “de-spend” that money. It must disappear. The only way for that to happen is to scratch it from corporate balance sheets as companies go belly up.

It’s not good news. But it’s the truth.

The second thing we must see is a consumer base that is screeching in pain. Just as NPR proclaims, folks are still spending. They’ve got the cash and don’t mind higher prices.

That’s how inflation works. It’ll go higher until folks can’t pay their bills anymore.

We’re nowhere near that level.

I hate to sound negative. But again, it’s the truth. That’s what you pay my team and me to deliver.

More importantly, though, you expect us to give you a solution to the problem. We’ve done that with our Modern Asset Portfolio.

Free Money

Take The Andersons (ANDE), for example. As I wrote in the December issue, it’s an ideal stock to own in an environment like this one.

It has strong exposure to the commodities market… an inflation hedge if there ever was one.

It profits from the government-funded renewables boom. (It’s free money… Why not take it?)

And it is a leader in the fertilizer market… which will be a critical realm as the world demands more food from fewer resources.

As you can imagine, the stock has treated us very well.

Since we first published the issue on December 6, The Andersons has jumped by 30%.

That’s huge.

But it gets better.

The bulk of those gains came in the last two weeks… some of the worst for the stock market in months.

It proves our point.

As interest rates rose over the last 14 days due to increased worries about inflation and Fed hawkishness, most stocks fell. Investors betting on a “soft landing” had to pull their money off the table.

But those of us who do the research, know the history and understand the no-BS facts are doing just fine.

There are gains to be made out there. Plenty of them.

If we stick to a smart, well-calculated strategy, there’s nothing to be scared of. But if we follow the masses… well, that’s never been a good idea.

The inflation fight is far from over.

Invest accordingly.

It pays.

Congrats on the gains.