Transitory Inflation?
โ ๏ธ The inflation rate is currently at 4.2% which is the highest in years with the Federal Reserve System, The Fed, telling us that it is just transitory inflation from an ๐ค๐ซ๐๐ง๐๐๐๐ฉ๐๐ฃ๐ ๐๐๐ค๐ฃ๐ค๐ข๐ฎ. Is it? or things are just going to get worse?
Last year, CPI (Consumer Price Index) fell as a result of falling demand and a recession. Now that the economy is recovering and demand is increasing, it is natural that compared to last year, inflation is going to be higher since inflation is just the annual change in CPI.
๐ Another reason why we're seeing higher inflation is because of a ๐๐๐จ๐ง๐ช๐ฅ๐ฉ๐๐ค๐ฃ ๐๐ฃ ๐จ๐ช๐ฅ๐ฅ๐ก๐ฎ ๐๐๐๐๐ฃ. Supply cannot meet demand for many commodities such as semiconductors, lumber and copper $COPPER . Let's not forget oil $OIL . Last year prices went negative. It is obvious that from there, we will see higher inflation.
๐ฐ This inflation may be transitory but the inflation from the increased money supply by the Fed is not here yet. M2 Money supply increased by 25% last year and all that money went into the stock market $SPX500 . When that money flows back to the real economy, that's when we should be worried. We are seeing more and more regulations and taxes are expected to increased, hence, bringing all that extra cash into the economy. ๐๐ ๐๐๐ฃ ๐๐ซ๐๐ฃ ๐๐๐ซ๐ ๐จ๐ค๐ข๐๐ฉ๐๐๐ฃ๐ ๐ฌ๐ค๐ง๐จ๐ฉ ๐ฉ๐๐๐ฃ ๐๐ฃ๐๐ก๐๐ฉ๐๐ค๐ฃ, ๐จ๐ฉ๐๐๐๐ก๐๐ฉ๐๐ค๐ฃ. Stagflation is low economic growth with high inflation.
All of this are only multiple possible scenarios. Nobody knows exactly what will happen. As value investors, we need to keep focusing on real fundamentals of businesses. A good business will do great no matter how the economy is doing. Of course, some sectors are more affected by inflation, that's why it is important to be properly diversified.
Watch the full video on YouTube:
https://www.youtube.com/watch?v=hX2xXRrSYMo&list=UUPO3uUyoXSaFWG-Ldq1mqEQ&index=2
ย
๐ฌJoin my INVESTMENT RESEARCH PARTNERSHIP for all my analysis and research, along with a course for investing for beginners for free๐ฌ
https://ishfaaqpeerally.teachable.com
๐ New to investing? Here's my investing COURSE FOR BEGINNERS with over 150 lectures ๐
https://ishfaaqpeerally.teachable.com/courses/enrolled/721696
๐ฃ๏ธJoin my private investing FACEBOOK GROUP for more ๐ฃ๏ธ
https://www.facebook.com/groups/IshfaaqInvesting/
๐ WEBSITE - Subscribe for Weekly Newsletter ๐: