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PROTECTING INVESTMENTS - Inflation and a Market Pullback

Market Crunch Time       Rich Kasparian Blog      October 12, 2022

So, the PPI (Producer Price Index) came in higher than expected. The PPI is the supplier side of the cost equation for goods and services. Everyone feels the impact of inflation especially energy and food. Consumers also feel the squeeze of supply chain issues when they order home appliances, cars, and other necessities. Going forward the Federal Reserve (who I am always critical of) will have to walk a fine line between raising rates to quell inflation and impacting other parts of the economy like lending/housing. The Fed’s practice of raising rates is an artificial way of taming inflation and is never a substitute for a booming economy.

An investment portfolio in these times is a different story. In this market there are two scenarios your portfolio will fall into.

          ⦁ Your portfolio is comprised mostly of mutual funds, stocks, and ETF’s. A panic is probably ensuing especially that the market has pulled back to November 2020 levels.

          ⦁ On the flipside if your portfolio contains investments that have downside protection levels or future guaranteed income regardless of current market conditions then you probably are relaxed and feel like you are Warren Buffet.

 In both scenarios we prefer a higher market but option #2 may be a better place to be in at this time and where the bulk of my clients are.

Moving ahead if you are in the Option #1 category you may want to consider implementing alternative strategies in your portfolio that look to capture the upside while striving to minimize downside impact in the current market. 

To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision. No strategy assures success or protects against loss. .Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual