What The Hell Is Stagflation And Where Should I Invest Now?

I keep seeing a lot of talk, articles, and commentary on Stagflation! It sounds worse than Covid.

So I did a bit of research on stock and sector performance in the 1970s. That was the last period of stagflation in the United States.

Stagflation is a period of slowing economic growth, rising interest rates, rising inflation, and higher unemployment. Yes, this is bad.

What did I learn?

First of all, we currently have low interest rates that are rising and low unemployment. We do have slower growth and high inflation. So we meet most of the criteria for Stagflation.

In the past, gold, commodities, energy, utilities, consumer staples (with pricing power), real estate, pharmaceuticals, food, tobacco, gambling, beer, and liquor, and of course TIPs (inflationary bonds) did better than the market overall. Growth stocks, tech, and software have done poorly.

Next, I put together a list of some common ETFs and a few stocks that conceptually should do well during stagflation. I added SPY (SP500) to the list so we have a benchmark.

The list above is sorted by one-month performance. You can see LAND (a farmland real estate company), commodities, energy, and gold leading the list. And you can see nearly all of them beat SPY during this time period. Surprisingly to me, gaming has not done well.

A couple of interesting ETFs: MOO. Agribusiness. This should have pricing power. EWZ. Brazil. They export a lot of commodities we use.

I hope you find this list useful. We have. In our core - non-V2 account - we have migrated to some of these areas. This is not a recommendation, please do your own research and make your own decsions.

No single indicator, chart, or list gives market clarity. They each give a point of view that we factor into our model. This is not a prediction, it is a perspective that we need to pay attention to various possible outcomes.

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Distance=Victory

Chris

The V2 Model has gained an impressive 1,454%% from 2016 through 2021.

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We do not anticipate what is going to happen. We allocate based on where things are. We do not forecast, we follow the math and work to get on the right side of the next extended trend.

V2 is a proprietary investment Model the results of which we make available in our newsletter. We give our holdings, changes before they occur, our allocations, and performance on an ongoing basis. You can discover more about the Model, our performance, and how it works by checking out our website.

We have researched and developed a pool of common and popular ETFs. We will select which ETFs to invest in based on market conditions and our short-term, medium-term, and long-term trends. We will also model asset class ratio behavior for our decision-making process. Leverage will be used when appropriate and we will short the market in a downturn. If no investments meet our rules, we will go to cash. We will change holdings at any time during the month.

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Chris Vig is president of The Vig Company and is an investor, artist, author, business consultant and former CEO living in Monona, WI. This article is for entertainment purposes only. We may own, buy, or sell any security listed here at any time. Do your own diligence when investing your hard-earned cash. Follow The Vig Company on Facebook.

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