Snir's investing desk is a newsletter focused on intelligent, value       investing for the individual investor. The subjects are evergreen and de

Snir's Investing Desk

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2021-06-21 14:00:06

Snir's investing desk is a newsletter focused on intelligent, value investing for the individual investor. The subjects are evergreen and deals with the essence of investing, mental models, and concepts.

Inflation has been a trending subject for the past few months of 2021, and it gets all the more heated as we see recent Consumer Price Index measurements that show ~5% rise, along with higher inflation expectations from the Fed.

Whether inflation will go rampant or not is a very complex subject beyond this article. This article assumes you did your own research and got some conclusions on incoming inflation, and you want to know how best to hedge against it.

Determining how much inflation you think is coming and managing this risk is a crucial step. It will decide how much of your portfolio will be devoted to inflation hedges and how you'll pay for "opportunity cost" - for example, whether you should pull out 20% or 100% off of a promising growth company you're invested in.

When looking at asset allocation statistically, the details are often hiding behind big numbers. So, for example, a statement like "gold is a great inflation hedge" is factually accurate but might not be right at certain times.

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