Stop for a moment.
Ask yourself: do you or your money manager have a well-developed, written-out investing strategy that takes account of all market conditions?
It’s okay if you don’t.
But you know what to do if that’s the case.
My own written investment strategy sits quietly in a Google doc like a well-worn leather-bound journal, waiting for a new entry or to be consulted in times of uncertainty.
One of the most helpful aspects is a notes section jam-packed with observations on the financial markets.
Like this one:
“In times of inflation or when inflation is likely to emerge, rotate into energy stocks, especially oil stocks (Exxon, BP); commodities like oil increase in price on the open market, boosting the earnings of energy stocks. Other inflation hedges include mining stocks (Alcoa, Barrick Gold) but they tend to be much more speculative than oil stocks.”
It helps that I’ve been investing for over a decade and I’m able to see these patterns play out in real-time.
I feel like a dinosaur.
Much more speculative = riskier due to wild share price swings.
Bottom line #1: when inflation increases, so do the earnings of energy stocks and so does the share price.
Bottom line #2: inflation is very real and becomes illusory when the opportunity for a safe entry point presents itself.