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Ask HN: What should founders do to protect against inflation?

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31–40 of 54 posts

Re: Ask HN: What should founders do to protect against inflation?

#31

The best thing you can do is ignore all of the inflation talk and focus on building your business. If your startup plans are put at risk by a couple extra percent of inflation, you have bigger problems. If you're selling a product or service, don't forget that the price of your product or service will also rise with inflation. Unless you have a strange business that requires multi-year inventory storage and low margi…

This is dead-on, but just to add to this, none of your investors are investing in your company for a 7 percent yearly return. The SPX will almost guarantee those. They want grossly outsized returns that are large enough for inflation to be a mere speedbump. Inflation shouldn't even enter the conversation.

> This is dead-on, but just to add to this, none of your investors are investing in your company for a 7 percent yearly return.

Great point.

Also remember that your investors are investing specifically in your business, not giving you the money to re-invest in something else.

If you take investment money from someone to run a business then turn around and flip it into stocks or Bitcoin or something, you're going to have a serious problem if the value goes down. You might even have a problem if the value goes up. Investors don't take kindly to someone losing their money on something that wasn't agreed upon.

Re: Ask HN: What should founders do to protect against inflation?

#32

The best thing you can do is ignore all of the inflation talk and focus on building your business. If your startup plans are put at risk by a couple extra percent of inflation, you have bigger problems. If you're selling a product or service, don't forget that the price of your product or service will also rise with inflation. Unless you have a strange business that requires multi-year inventory storage and low margi…

This is dead-on, but just to add to this, none of your investors are investing in your company for a 7 percent yearly return. The SPX will almost guarantee those. They want grossly outsized returns that are large enough for inflation to be a mere speedbump. Inflation shouldn't even enter the conversation.

> The SPX will almost guarantee those

Interest new use of the word "almost"

Re: Ask HN: What should founders do to protect against inflation?

#33

The best thing you can do is ignore all of the inflation talk and focus on building your business. If your startup plans are put at risk by a couple extra percent of inflation, you have bigger problems. If you're selling a product or service, don't forget that the price of your product or service will also rise with inflation. Unless you have a strange business that requires multi-year inventory storage and low margi…

[deleted]

Re: Ask HN: What should founders do to protect against inflation?

#35

> personal savings Buy I-bonds and TIPS. The more inflation there is, the more money these instruments make. They are literally the "bet on inflation" play. The problem, in the past 10 years, is that inflation has been historically low. So TIPS and I-bonds were a bad play. Turns out that this year, they were a good play. > startup cash Buy futures in the commodities that affect your business. If you need a bunch of o…

I think VOO is the real TIPS, at least if you live in a highly desirable part of the US.

Re: Ask HN: What should founders do to protect against inflation?

#37

At our current rate it’s only slightly over 100% inflation for the next year. Really it’s no big deal.

Are you assuming that the “October measure” of 6.2% is a per-month figure (meaning 12 of them would be +106% compounded [1.062^12-1])?

That’s not how it works. The 6.2% is an annualized figure.

(If the one year outlook were for inflation to be >100% in the US, people would be flipping out; BTC would be $200K+; markets would sell off 40+%; Treasuries would be selling at a yield well over 75%)

Re: Ask HN: What should founders do to protect against inflation?

#39

> personal savings Buy I-bonds and TIPS. The more inflation there is, the more money these instruments make. They are literally the "bet on inflation" play. The problem, in the past 10 years, is that inflation has been historically low. So TIPS and I-bonds were a bad play. Turns out that this year, they were a good play. > startup cash Buy futures in the commodities that affect your business. If you need a bunch of o…

I think VOO is the real TIPS, at least if you live in a highly desirable part of the US.

Not really. Everyone gets stuck thinking about 2008 (where VOO acted a lot like inflation), but 1999 is an example where the stock-market crashes, but inflation remained steady.

In 1999, VOO would have crashed, but inflation would have remained steady, so TIPS would have done well.

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If you want to "bet on CPI inflation", its hard to beat TIPS. Its literally indexed against CPI, and is the most direct investment into the biggest inflation statistic.

VOO would sometimes track inflation, but other times (such as 1999), it would not.

Re: Ask HN: What should founders do to protect against inflation?

#40

At our current rate it’s only slightly over 100% inflation for the next year. Really it’s no big deal.

Are you assuming that the “October measure” of 6.2% is a per-month figure (meaning 12 of them would be +106% compounded [1.062^12-1])? That’s not how it works. The 6.2% is an annualized figure. (If the one year outlook were for inflation to be >100% in the US, people would be flipping out; BTC would be $200K+; markets would sell off 40+%; Treasuries would be selling at a yield well over 75%)

It’s month over month actually.
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