Clear and Present Inflation
Enjoy the eye of the storm.
I think that’s where we find ourselves — in markets, at least.
Elsewhere — in politics, poverty, and pandemics, for just a few examples — the storm rages on.
Fitting, then, we’re coming off a record hurricane season. Record wildfire season.
Record unemployment. Record stock prices. Record voter turnout.
The records of 2020 won’t soon be forgotten.
To recap the year would be impossible, so I won’t try.
I will say we had an absolutely fantastic year in the market and it’s almost easy to feel guilty for that when you see so much pain all around you, and all around the world.
But then you remember we all have our individual struggles and prospering on your own merit is a just and rewarding endeavour. Helping others do the same adds to the reward. Helping those who can’t compound it.
We’ll need a lot of individual prospering and communal helping as we continue to combat COVID-19’s physical, fiscal, and psychic effects in the short- and long-term.
There were many ways to prosper this year in the market with the S&P 500 up more than 12% and gold up 20% year-to-date.
As long as you didn’t own energy stocks, which as a sector are down 34% on the year, you did ok.
Eye of the storm because where we’re making money is changing.
The storm is spinning.
Things are… turning.
Readers of my Foundational Profits are up double digits on energy stocks over the past two weeks.
Foundational Profits is Nick Hodge’s monthly newsletter for all investors.
Monthly issues track and comment on the performance of major global economies, currencies, and interest rates… and reveal how they influence stock and commodity prices.
Cyclical themes — trends — are identified and exploited for profit via highly-liquid companies and sector-themed funds listed on major exchanges.
Current coverage includes cannabis, tech, and energy.
Be clear: Energy stocks are the worst performing S&P sector of the year by far.
They’re also the best performing sector of the past month.
It’s ok to change your mind — and your portfolio — when facts and markets change.
Fact is, inflation is manifesting differently now than it has the past few months. Namely, it’s not manifesting in gold.
The conversation in our sphere continues to center around why gold isn’t rising more in the face of this clear and present inflation.
To that I’d say that inflation still exists — with central bank intervention still underway and more stimulus on the way — but it is for the time being manifesting more in commodities and stocks than gold.
Copper is now at six year highs near US$3.50 per pound.
I have those same Foundational Profits readers in Rio Tinto (NYSE: RIO) below US$52.00. It’s now trading at above US$75.00, putting us up 44% on the shares. Plus it pays us over 5% yield.
The stock market is at all time record highs despite seeing multiple quarters of declining earnings growth.
That’s inflated value.
A tulip in 2020 is called DoorDash, which IPO'd last week and quickly fetched a valuation more than four times that of Domino’s. DoorDash lost $667 million dollars delivering food in 2019. Domino’s had a net profit of $400 million delivering pizzas that year.
You can see inflation in many places.
Check out Foundational Profits if you need help putting your dollars where your eyes are.Call it like you see it,
Publisher, Resource Stock Digest
Nick Hodge is the co-owner and publisher of Resource Stock Digest. He's also the founder and editor of Hodge Family Office, Family Office Advantage, and Foundational Profits . He specializes in private placements and speculations in early stage ventures, and has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world.
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