Yourself and your brain. If you can't find an 8% YoY around you are you even a cogitating being?
Inflation is one of those things that infiltrates people's brains . Everything macro infiltrates people's brains and makes them waste time, while they should focus on themselves and their surroundings.
I'm not convinced there is any non derivative asset class that can act as a hedge against inflation.
Perhaps some derivative securities are (put options, swaps, maybe even trading currencies?) but these all have a premium and some have time decay with an end date (and a renewal thereafter if you decide you want to continue hedging against inflation). They all require good timing which we all know is not really possible. By the time you're feeling the inflation, the premiums for any of these are too high to likely to be worthwhile.
Put options are far more accessible to non institutional traders but more more complex securities (swaps, currencies, and other derivatives) are not.
The only other instrument I can think of are inverse ETFs (short positioned ETFs like SARK which is the short ARK ETF) or volatility indexes.
All this is to say - I don't try to worry too much about this. Inflation is an issue certainly - but one that can be more easily fought by improving your income (promotions, switching jobs, additional income streams etc).
What certainly doesn't act as an inflation hedge are cryptocurrencies (despite at least bitcoin's inherent deflationary nature once all of it is mined). Perhaps at that point bitcoin will be an inflation hedge but we have a few decades until we find out.
What is tricky about inflation today is up until recently interest rates were incredibly low so there has been no other option except the market. Now bond rates are starting to come up but are still quite low to be attractive (for me at least - unless you have a significant amount of cash to make it worthwhile) though the guaranteed income stream from them may be more attractive compared to a wildly fluctuating market. Even with this, the 2-4% return on a bond still unfortunately yields a negative real term rate.
Im curious to know if inflationary environments are inherently more volatile. In which case, long volatility would be an important component to a portfolio. I know Chris Cole has studied this extensively but not sure how the long volatility component fares relative to the other components.
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[ 4.4 ms ] story [ 25.9 ms ] threadInflation is one of those things that infiltrates people's brains . Everything macro infiltrates people's brains and makes them waste time, while they should focus on themselves and their surroundings.
Perhaps some derivative securities are (put options, swaps, maybe even trading currencies?) but these all have a premium and some have time decay with an end date (and a renewal thereafter if you decide you want to continue hedging against inflation). They all require good timing which we all know is not really possible. By the time you're feeling the inflation, the premiums for any of these are too high to likely to be worthwhile.
Put options are far more accessible to non institutional traders but more more complex securities (swaps, currencies, and other derivatives) are not.
The only other instrument I can think of are inverse ETFs (short positioned ETFs like SARK which is the short ARK ETF) or volatility indexes.
All this is to say - I don't try to worry too much about this. Inflation is an issue certainly - but one that can be more easily fought by improving your income (promotions, switching jobs, additional income streams etc).
What certainly doesn't act as an inflation hedge are cryptocurrencies (despite at least bitcoin's inherent deflationary nature once all of it is mined). Perhaps at that point bitcoin will be an inflation hedge but we have a few decades until we find out.
What is tricky about inflation today is up until recently interest rates were incredibly low so there has been no other option except the market. Now bond rates are starting to come up but are still quite low to be attractive (for me at least - unless you have a significant amount of cash to make it worthwhile) though the guaranteed income stream from them may be more attractive compared to a wildly fluctuating market. Even with this, the 2-4% return on a bond still unfortunately yields a negative real term rate.