Quantum Wealth Summary

 

  • Inflation and higher interest rates make investing for real growth and income a lot harder.
  • Experienced investors take advantage of the sell-offs and fear of others to grasp new opportunities.
  • We explore 2 interesting opportunities that are showing signs of rising ahead of inflation.
  • We consider inflation-beneficial strategies for building long-run, robust portfolios.
  • As a bonus: we also reveal our Weekly Top 5 Quantum Trends. These are the most impactful global opportunities that we are currently watching this week.

 

 

It was surprising how much money I sold selling pizzas door to door as a teenager.

Simple strategy. Knock on the door around dinner time. Piqued with the realisation of how long it takes to prepare food for a family, the prospect of an economic pack of five pizzas was very appealing.

These were also different times. Inflation ran into double digits. If a deal looked good enough, you were better to put your money into that. Before prices increased again.

Then, I mistakenly thought, I was doing well taking a term deposit with the National Australia Bank. If I remember right, at 16% p.a.

Of course, the mortgage on my parents’ home — and those around the neighbourhood — was much higher.

Today, as an investor, I have indelible memories of growing up in the heady 1980s. Things were moving fast. It appeared both a time of struggle and of fortune.

Inflation was eventually tamed. But many investors were savaged by the 1987 sharemarket crash. This rocked a small and then wildly expensive exchange here in New Zealand more than most. Many still have dark memories.

 

Lessons from investing in inflation

 

Then, as now, when you deploy money in an inflationary market, you’re damn well hoping your investments can keep up.

Shares involve owning part of businesses. By definition, to deliver any return at all, those businesses need to…

  • Provide return that exceeds the hurdle of inflation — currently running in this country at around 7% p.a.
  • Manage to trade profitably through inflationary pressures — which means having the ability to increase prices, control costs, or grow faster than the inflation rate.

The good news is that many analysts believe inflation could be peaking. Prices of microchips and shipping containers are coming back. House prices even faster.

But it’s likely we’re also going to be in a much higher interest-rate environment for the foreseeable future. Central banks have only one main handbrake to right the slide of inflation: interest rate hikes.

Further, if you look at global demographics, we’re seeing a sea change. The baby boomers won’t retire like the Silent Generation. They’ll spend more…

While my grandparents walked the dog and melded slivers of soap together to make new cakes, my parents are installing solar panels, contemplating an EV, and planning a trip to Italy.

Meanwhile, the rural-to-urban migration to Chinese factories is slowing. That great producer of low-cost goods for the past two decades sees a faltering economy.

The low-to-zero interest rates of Covid and a deflation-threatening economy are probably gone for the foreseeable future.

That means investors need to get a lot sharper.

So, today, 2 fascinating opportunities we’re looking at. To not only keep abreast of inflation and the hurdle of higher interest rates. But to potentially beat it…