Earlier quoted context omitted.
Expanding the money in circulation may not increase the inflation rate, but I would believe that it does trigger inflation in other asset classes such as stocks and real estate. I'd be happy to be disproven with data, but my anecdotal experience since 2008 is that while my purchasing power hasn't budged much (for things like electronics, travel, food...), my ability to purchase a house from my wages has decreased and…
> asset classes such as stocks and real estate. Which is not inflation, but asset appreciation (i.e. the goal of investment). Inflation measures the price level of consumables. Stock and real estate is not consumed.
Ask HN: How are you hedging against inflation?
31–40 of 45 posts
Re: Ask HN: How are you hedging against inflation?
#32Re: Ask HN: How are you hedging against inflation?
#33Re: Ask HN: How are you hedging against inflation?
#34Earlier quoted context omitted.
> asset classes such as stocks and real estate. Which is not inflation, but asset appreciation (i.e. the goal of investment). Inflation measures the price level of consumables. Stock and real estate is not consumed.
One person's "asset appreciation" on real estate is another person's inflation of housing costs.
Re: Ask HN: How are you hedging against inflation?
#35Earlier quoted context omitted.
CPI includes housing, though. Obviously it's fair to say that inflation may be measured more in some prices than others, but you're sort of muddying the waters by referring to housing as both an asset class and a cost-of-living, right? Perversely, if inflation primarily affects "assets" (i.e. of the investment/speculation type), the premise of the original question here is sort of flawed: if increasing the money supp…
When you buy stocks there is someone on the other side selling stocks, the question is, if that person has fiat now, why isn't he spending it? If he isn't spending it (as can be seen with low inflation), why would he sell the stock in the first place? Since companies' credit rating rises with the value of their stock, they can afford to borrow more and grow their company. Why isn't this happening? Why is Apple sittin…
(Maybe this is what you're saying as well?)
If the Fed prints $1,200 for every adult making less than whatever it was, and prices of everyday goods and services don't go up, and instead those adults all turn around and spend their $1,200 on Gamestop and NFTs...
...it all kinda makes sense.
https://nymag.com/intelligencer/2021/04/nft-future-of-money....
Perhaps more explicitly: purely quantitative attempts to understand the economy (as with monetarist explanations) fail to account for the social component. Maybe people are bored 'cause of the pandemic, and as a result, they spent more of that $1,200 on gambling as a form of entertainment, instead of on restaurants or new clothing.
Animal spirits.
Re: Ask HN: How are you hedging against inflation?
#36You have to look at more than just inflation related data for the asset. Gold tends to be a inversely correlated to the economy because people use it safety asset. So right now, I think the gold prices are already inflated from people moving into it during the crash last year. Silver seems to have suffered a similar fate after the GME thing too. If you are looking at metals, it might be good to look at those positively correlated with the economy. After all, we will only see real inflation if the economy is doing well too. I like platinum, but got into that about 9 months ago. Copper would have been good too. I'm not sure if they still make sense at their current levels, but what do I know.
Crypto is not a real inflation hedge in my opinion. If you're hedging, it's not supposed to be highly speculative (on other factors). Crypto is much more likely to experience wild swings unrelated to inflation.
Real estate is an option, like raw land or maybe residential rentals. I say maybe for rentals because of all the coronavirus restrictions on collecting rent. I wouldn't be surprised if that sort of sentiment continues or expands in the future. I like raw land, but that depends on the area and other stuff. There's an increasing threat that raw land could be zoned conservation, removing it's potential future value (I won't get into the bigger conversation around that). The mortgage on your own house can be beneficial.
I plan to stay with mostly equities. There are a lot of options in there as far as sectors or industries. A materials or induatrials ETF could be good, but it would require more research to see how covid has affected supply/demand.
Re: Ask HN: How are you hedging against inflation?
#37Earlier quoted context omitted.
One person's "asset appreciation" on real estate is another person's inflation of housing costs.
Housing is part of the CPI https://www.bls.gov/cpi/factsheets/
Re: Ask HN: How are you hedging against inflation?
#38Inflation-linked bonds offer a direct hedge over inflation. Not exactly sure what the downside is, so you’ll have to look that up (or someone else may comment on it). Crypto/gold/real estate are not hedges against inflation. They’re pretty wild bets. If you do this, make sure you diversify... On a side note, inflation is a good thing cause it makes you want to invest your money. Seeking a refuge value is not playing…
Re: Ask HN: How are you hedging against inflation?
#39ETFs for retirement fund. And I will likely get downvoted into oblivion like every time I mention crypto on HN, but crypto. It's the only way I've found to hold cash (in stablecoins) and receive above inflation yield.
Re: Ask HN: How are you hedging against inflation?
#40Inflation-linked bonds offer a direct hedge over inflation. Not exactly sure what the downside is, so you’ll have to look that up (or someone else may comment on it). Crypto/gold/real estate are not hedges against inflation. They’re pretty wild bets. If you do this, make sure you diversify... On a side note, inflation is a good thing cause it makes you want to invest your money. Seeking a refuge value is not playing…