Navigating Inflation: Strategies to Protect Wealth and Invest Wisely in an Uncertain Market, Ep. 323

Inflation Isn’t Going Anywhere — Now What? | 5 Key Takeaways for Investors 

This week on The Capitalist Investor, Tony and Derek dig into one of the most stubborn challenges in today’s economy: inflation. From what’s fueling it to how investors can respond, they unpack practical strategies for protecting and growing your wealth in today’s high-cost environment. 

Here’s what you’ll learn in this episode: 

• Why inflation remains sticky and why the “new normal” might be here to stay.
• How the Fed’s interest rate decisions continue to impact housing, lending, and investor behavior.
• Which sectors perform best during inflation, including gold, energy, and dividend stocks.
• If real estate is still a safe hedge, or if a market correction could be coming.
• Why emotional investing is dangerous, and how to build a steady, long-term plan.

Whether you're navigating your personal portfolio or managing wealth for others, this episode offers insights to help you stay grounded—and strategic—amid the noise.
 
📩 Have a question or a topic you'd like us to cover? Reach out at info@SWPconnect.com
 
#Investing #Inflation #InterestRates #RealEstate #FinancialPlanning #StockMarket
 

Transcript

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On this week's episode of the Capitalist Investor, I think we can all say that inflation isn't going away anytime soon. So today we're going to talk about ways to navigate this inflationary market and ways to protect your wealth. Hey, Tony, how's it going today? Good, man. We are here in Cleveland. It's actually turning into summer, from 50 degrees to 80 within three days. It's awesome. It was awesome. I don't think it's going to last, though. So. Man, positive energy. Positive energy. So thinking, talking about things about positive inflationary has been very positive over the last several years. So today I think it's a good thing to talk about inflation and how it impact, how it impacts your life and your investments. So let's start, let's build a foundation and talk about why is it so stubborn? And I guess the one thing we can say is, like, I mean, it all kicked off with COVID right. Everything stopped being produced essentially and shipped, and people started, you know, buying things, creating less supply and more demand, and boom. Now you got 9% inflation. But, you know, we can, like right now. So I mean, that, that, that type of inflation has come gone and it's not going away. Everything's stuck. Like, we're not going to have a deflationary period. I hope we don't. Right. But that's, we're stuck with all the inflated rates. Now it's going to start going back up, you know, the way history has, maybe 1 to 3, 3, 4% every single year. And we have to keep up with that now. But, you know, like, and I think in today's environment, you got a couple things that can help decide which way inflation does go or how fast it goes up. And one of them being the Fed decision. You know, are they helping or are they hurting? Right. So the Fed raised rates to curb inflation, like stop growth, like stop people buying things because interest rates were so low. Well, they, I think they've done a pretty good job with the soft landing. If you asked President Trump, I think you would have a different opinion. But cutting rates at this moment is, it can be inflationary because lower rates should stimulate growth, and with lower rates, it should encourage borrowing, spending, investments, things like that. And all, with all of those two things combined, it should spark a need for demand again. Right. You know, and, you know, limit the supplies. Right. So it's gonna, it's gonna increase demand when there's no supply, if people are buying things. And that's good. I mean, that's, I think that's one of the, one of the catalysts that President Trump needs in his one big beautiful bill is people to start spending money Y. And people can't buy houses at 7 or 8% interest rates. People can't buy cars when their interest rates are high single digits like they can. But it's, it, it hurts the wallet. You know, it hits the, hurts the pocketbook a little bit. So what are your thoughts? Yeah, so, you know, I think, you know, we've obviously been talking about this now for a very long time, so it is a little bit nice to finally see some light at the end of the tunnel. You know, I think, I think during COVID in the aftermath, you know, it's, it's really pretty simple. When you increase the money supply. So when you give away free money. Yes. That that is going to cause inflation and that, that, you know, giving away those things and you know, basically opening this, the spigots. You know, there was a lot more aid or whatever you want to call it that was passed out besides those stimmy checks. You know, there, there is, you know, pauses on loans and just a whole laundry list of inflationary measures to, you know, quote unquote, keep, keep the economy going. Right. So it is nice to finally be able to say we're kind of on the downside of that. I think. Yeah, it's, it's just calming down. Right. It's getting back to normal. Inflationary pressures of again 1 to 4% per year. But there are a couple other things causing inflation and this is more, maybe it's investment, but it's also personal. So like, think about, you know, think about energy. You know, with this AI boom there they got to create all of these data centers that's going to be sucking up energy. Y. You know, and that's just for AI what about energy is needed for food production, utilities, you know, travel? Like, like things that impact our lives on a day to day basis are also being, we got pressures there too. And, and it's part of the puzzle. Right. And then we also have again, I just feel like this is the new norm. We have to understand that, you know, nothing's going to reset. We're not going to go back to 2022 prices. It's not going to happen. But again, we're, we're in a. I think we're back in a state where inflation is normalizing now. I think, I mean you can also just argue that now we need wage inflation to catch up. People need to, you know, make more money to, to buy all these fun Things. Right. All right, so point number two. All right, now that we kind of set the baseline, where do you put your money? And you know, historic sectors that historically outperformed are energy, materials and real estate. So I kind of have a idea on that too. And you know, we can also like, you know, materials, but I can also call like real assets like gold and commodities. So there's a lot to unpack there. But we just saw this the other day where you know, President Trump, you know, said, you know, he, he is the nuclear deal. Right. And I think every Nuclear stock jumped 10 to 30%. And then I had, you know, some clients reach out and say I want to get involved, you know, like, can we buy all these stocks? I'm like, well, Stock went up 40% in a day. We missed it. Like it's, don't buy it now. Right, right. But we have, you know, in our portfolios because we're actively managed and we've been, we knew this was going to be the theme. You know, nuclear is a clean energy and it's durable. It's proven, it's been around for over 50, 60 years. It's, it's a good source and it's clean. Now the, the remnants of it, you know, like the radioactive material that's, you got to get rid of that. Right. And they find ways to, you know, bury that stuff in the, in the deserts and, but nuclear. So we've been involved with like cameco, they're uranium miner and then also uranium, the etf, we've been involved, we have that exposure. But the stock that jumped 30, 40%. The one thing that I did, like I was on GLISS claiming like months and months ago and I talked about uranium and it's like we like Cameco and we like, we like the uranium etf because every other nuclear stock is so small that it just small companies come with high volatility. That's why you see a 40% pop in a day. I bet you, I bet you they've retracted 10% from their highs. Right. The other thing is, is like now we have to think about like cash positions. When we have this high inflation, stocks usually keep up. You know, dividend paying stocks, you know, there's higher prices that we're paying on materials. We have higher revenues for these companies and that means if they're a free cash flow type of company, that means they should be pushing out higher dividends to their stockholders. So being involved in like dividend paying stocks in this environment could be greater than holding cash. Now I know cash is cash where it pays 0.1%, but we do have money markets and Treasuries that are yielding between 4 and 5% now. So you do have options, but 4 or 5% when the market is done pretty well over the last few years. And still, we're still predicting that the market should be on a positive note by the end of this year, even with the pullbacks earlier this year. But these are places to, to put your money right now. And, and that's what we do. We have, we have these, we, we have the, our dividend paying portfolios, we have exposure to rainy uranium. The one place that we had exposure but we eliminated was gold because it's run up so, so much. It's so expensive. And I can't say that it won't continue, but it's, it's, it's in the stratosphere right now from where it has ever been historically. So those are one thing. What are your thoughts, Steve? Yeah, you know, I think, you know, really the, the cash and the, the fixed income market too has kind of been, yeah, it's nice to get a higher yield on your cash savings. But I think what we've given up for that is an extremely volatile bond market over the last three, four years. And that's an area we're used to just kind of getting 6 to 8% return and not even thinking about it. With the increased inflation come costs as well. And the bond market has certainly been turbulence. Probably the wrong word, but just not yielding what we are used to having at yield. Yeah, well, I mean you would think a catalyst for, or a positive catalyst for bonds would be the Fed lowering interest rates. You would think that that would be happening and yields have been popping already. But now the one other thing I did mention is historically real estate has been one of the best performers over a long period of time, especially since COVID I think everyone's house has gone up 30 to 100% value. Whatever. Think about that. Right? My, my argument, I've said this multiple times throughout different episodes, but real estate might be one of those assets in this inflationary time that actually see, you know, a pullback in real estate prices. And I'm talking, I'm talking like you know, personal real estate homes and things not commercial and real, you know, things like that. But I'm thinking, I'm talking that because right now everyone that has a 3% interest rate locked in, they're not moving. And I don't feel that anyone's going to really start thinking about Selling their house that has a 3% mortgage until rates get to that between 5 and 6%. And we're hovering around 7. So the only way for that to really come down. And again, President Trump's been pounding on the Fed, specifically Powell, to lower interest rates because he wants to simulate the real estate market. But there's no, there's no supply, but there's still demand. And when you start lowering interest rates and now people start relinquishing their 3% mortgages because they can get a 5, they can swallow that pill and say, okay, I'm okay spending more money on the mortgage or whatever. That's going to be the catalyst to create supply. And now when every, when there's more houses on the market, I would assume that the prices would come down. That, that is, this is the one time where I feel we could see a pullback in home prices. Yeah, I completely agree with that. And, and I think we're, we're actually starting to see that a little bit. We're starting to get, you know, news and reports about actually some supply coming back into the market. Kind of a more sellers than buyers type of situation really, because of what you just said there, there's just, you would have to be crazy to, if you had a 3% mortgage to sell your house and then take on more debt than you have right now at 7%. That's just going to be. Your payment's going to more than double. Yeah, more than double. I don't want, I don't think many people are going to do that. No. So you have to have money to burn or you have to be in a situation where you have move. That's pretty much what's going on in the real estate market today. So, you know, so I think, you know, we talked about this before and it is kind of, you know, one of my big points here. We're not going to be able to like, you know, tax and save our way out of this current mess that we're in with the deficit. You know, we're going, we're going to have to stimulate the economy and we're going to have to produce more and we're going to have to raise gdp. Man. As a sidebar, how upset is Elon about the, how, how piggish the new bill is? Well, he's right, you know, like that's, that's, that's the low hanging fruit that, you know, the, the public wants to see, you know, get taken care of. Yeah. And he looked at Trump's bill and said, what do you? Yeah, this is, this is not what I, you know, I, I spent the last three months of my life trying. To find, working 24 7. Right. Trying to like, find areas to save money. And you put this bill out there. So I wonder, I wonder how their relationship is gonna turn out. So you know what I give, I give Elon some credit on this. I know this is a huge sidebar, but I give him some credit where he's a realist. Like, like again, you can go on both sides of the aisle. You should be able to. Right. And Elon used to be on the left side and now he's more on, you know, right of center, kind of like our views. But there's things that he'll, he'll go back and be like, this doesn't make sense. It does make sense to cut these and. Right. You know, so I, I give him a lot of credit for not just falling, quote unquote, falling in line. You know, he's voicing his opinion and he's right. Yep, he's right. So, all right, how do we stay calm in this emotional investing? Right, because inflation can scare a lot of people. And one thing I will say is that we have survived high inflation in the past and we will, we will survive and thrive going forward. So first and foremost is time in the market is, is greater than timing the market. You have to stay involved, right. Building, you know, we need to be able to build an investment theme that is actively managed right now because it's very important because a, you know, President Trump constantly is communicating and creates volatility that goes with it. And he's, and I'll even say he's more high. He's highly active on communicating and, and it just throws a wrench in a lot of I, sometimes long term investment strategies. You know, I, I want to tell everyone to stay long term and you should, but there are some things where, you know, you'll have your long term investments, but there might be some short term based on what is, what is going on. So we need to keep that in mind. And your thoughts on that, Derek? Yeah, I mean we say it over and over again, but, but that's because it's true. You know, it's just going to be extremely volatile until some official trade deals get put into place. The tax bill is locked in too. I tell everyone I talked to this, and you said it clearly last week, you know, it's that that tax bill getting passed and implemented is, is priced into the market. So if there is trouble there, you know, you're going to see a massive. I don't want to say Matt, but you're going to see a big pullback. You're going to see a percent. Ish. Yeah. You're going to see a pullback. I can't, I can't determine how much or how little, but it's priced in. I mean, honestly, the market could pull back once it's passed because it's sell the news. Yep, that will happen probably. Right. You know, like that, that, that, that's definitely on the table too. But you know, to kind of wrap this up is inflation, we know is, has risen quite a bit in the last, you know, three, four years since COVID Right. And, but so should, as your, your portfolio should have too. And if you, if you got uninvolved and you sat in cash, you missed it. And that's why emotionally and emotional investing is, is really detrimental over a long period of time. And you can't, you have to stay the course. You have to stay involved. Now can you change your strategy? Sure. Right, can, but you, but you have to pick a lane. You can't, you can't flip flop either. Right. You gotta, you gotta make an educated decision on where you think things are going and stick to that because you can always change it. But the flip flopping, you're gonna. When you. Usually people flip flop, it's because they're chasing something they miss. Right. And that's a big problem for sure. Yep. So, you know, stay the course, get an investment thesis together and stick to it because, you know, it's in these volatile markets, in these markets that, that, you know, are reacting to news in real time, it's going to be volatile. So, you know, if you have a much bigger chance of magnifying mistakes if you're in there, you know, trying to time things because quite frankly, if you're trying to time things right now, you're guessing because you don't really have, you know, a solid idea of what's coming tomorrow, you know, as far as news is concerned. So, you know, stay the course, get a plan together and make sure you execute it. Yep, I agree, man. So. All right. Take us home, brother. All right, well, thanks as always for listening this week. If you guys have any questions, comments, show ideas, hit us up@infowpconnect.com and we'll talk to you next week. The opinions expressed in the podcast are for general informational purposes only and are not intended to provide specific advice or recommendations for any investment, legal, financial or tax strategy. It is only intended to provide education about the financial industry. Please consult a qualified professional about your individual needs.