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It’s Over For ‘Best Investments For Inflation’ – Seeking Alpha

JLGutierrez

As Wayne Gretzky famously said, “A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.” A good investor may hold what the mainstream media says are “the best inves…….

JLGutierrez

As Wayne Gretzky famously said, “A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.” A good investor may hold what the mainstream media says are “the best investments to beat inflation.” However, a great investor is investing for the next phase of the cycle.

What the ‘Magazine Cover Indicator’ Is Telling Us Now

The magazine cover indicator is a non-traditional contrarian indicator that says the cover stories in mainstream media often signal economic turning points. Perhaps the most famous example is the 1979 BusinessWeek cover that declared “the death of equities.” However, stocks went on to enter a bull market for most of the following 20 years.

Although the magazine cover indicator isn’t always accurate, the idea that the media generally covers economic conditions that have nearly run their course is accurate. Similarly, by the time the Fed (or NBER) declares a recession, the economic conditions they are reporting have already been priced into investment securities.

Today, the lead stories for mainstream media are inflation and rising interest rates. Following the Gretzky hockey metaphor, the media are skating where the puck is now, but smart investors are skating where they think the puck will be next. To fit the Fed into this metaphor, they’re reporting on stats from past hockey games.

Inflation Investments vs Major Market Indices

According to mainstream media, the best investments for inflation are TIPS, gold, commodities, real estate, and short-term bonds. The tide has begun to turn against the inflation play for investors and recent performance for market indices provides evidence.

Although these investments have mostly been a smart alternative holding to the S&P 500 year-to-date in 2022, July performance suggests a different story for the second half and into 2023:

ETF Name July Return YTD Return
iShares TIPS Bond ETF (TIP) 4.30% -5.12%
SPDR Gold Shares (GLD) -2.59% -4.01%
Invesco DB Commodity Index Tracking ETF (DBC) -1.99% 25.65%
Vanguard Real Estate ETF (VNQ) 8.62% -13.69%
Vanguard Short-Term Bond ETF (BSV) 1.01% -3.56%
SPDR S&P 500 ETF (SPY) 9.21% -12.62%
iShares Core U.S. Aggregate …….

Source: https://seekingalpha.com/article/4529737-its-over-for-best-inflation-investments

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