How to defend against inflation & potential recession

No surprise here, inflation accelerated to nearly 8% in Feb. Not only do we have pressures from wage hikes and high oil prices (which filters into pretty much everything else in our economy), Biden is now thinking of oil embargos on Russia which will worsen the crisis.

Moreover, some 50-80% of leading edge chips use neon gas from Ukraine. Chips shortage is already a massive problem right now even prior to this crisis. 

Markets right now are getting killed. Fed is planning on some 5 rate hikes this yr. I understand why the U.S. is cutting off Russia but this has massive repercussions for the rest of the world in driving up inflation and potentially (maybe even likely) sending us into a recession as rates are hiked aggressively. Russia probably took all this into the calculus of deciding to invade but no matter what we do (punish or not), we are screwed in some way. Though at least if we didn't impose severe sanctions, outside of Ukraine the rest of the world wouldn't be screwed. Honestly have no idea what the answer is.

What I do wonder though, how are you guys thinking of defending against inflation? Combination of falling markets + inflation means we are FAR worse off (fewer dollars, and those dollars can buy less)....it's frustrating also seeing our comp increases from last year's inflation quickly becoming meaningless

 
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https://www.wsj.com/articles/inflation-proof-your-portfolio-investments…

  1. I can't control inflation, so I don't try to defend against it
  2. this is the benefit of living far below your means, I have built in inflation protection
  3. quality assets should survive, so that's where my portfolio is at all times
  4. if the fed is successful at taming inflation due to a rapidly rising economy, of course it should hurt. last time this happened was 1981 when fed raised rates drastically, market fell 18% but closed out the year down 10%, hardly a death knell
  5. finally, markets are not getting killed. S&P down <12% from its high. covid it was down 35%, GFC down 60%, we could drop a lot more from here

study the early 70s, korean war, and cuban missile crisis for perspective 

 

Perfect post. The Fed and their continual market manipulation since Greenspan have caused unrealistic return expectations for many on this website and it shows when individuals say shit like "the market is getting killed" as a result of any sustained pullback. I'd argue we are seeing a market correction, especially in tech stocks where valuations were just unrealistic for at least the past decade. 

Array
 

My commodity ETF is ripping, so that’s something. Once I’m in the green, I’ll rebalance and buy some depressed indexes.

Traditional hedges against inflation are gold, oil, and real estate.

Check GLD and DJP.

 

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