By: Steve Smith
Last Thursday I mentioned a quote from BoA that predicted “transitory hyper-inflation.” Friday I followed up with a few more details.
That got a lot of attention from you and your fellow readers, so I thought I would take a closer look at the inflationary trends we are facing, and how we might profit from them.
Remember, no matter what is happening in the economy, someone is making money. That can be you if you have the right experience and research…
The kind of research I provide in my Options360 Concierge Trading Service. (you can take a test drive for just $19)
If we are just looking at price increases in lumber (375% between April 2020 and April 2021), drywall prices (approximately 100% since early 2020), copper (up 35% this year), and Oil (up 34% YTD)…
There appears to be a hyperinflation starting.
However, the real test will be if we see wages increase – as I mentioned in Friday’s email. It seems like we might be seeing wages increase as more and more employers fight over the few people willing to go back to work.
I think the government has forgotten that paying people to stay home isn’t a great way to encourage them to get back to work. Especially when you are paying them the same amount of money they would make at a job. Or more than they would make!
I suspect that we are going to see some tough times ahead for the economy, however, no one is building the Thunderdome.
And there will be loads of opportunities if I am right. If I’m wrong even better….
We stay in this bull market and ride the wave.
My point is there is no reason to be worried, there is every reason to be prepared.
Right now we are still in a bull market, so we trade the bull market until and unless it tells us differently.
Stock selection is vitally important, and it’s even more important than ever not to have any naked positions.
So the short game is to play some of the cyclical stocks that benefit from commodities inflation.
In the meantime, we need to have a long-term plan that will benefit from a bearish move that wage inflation may bring about.
In short, ride the bull and be wary of the bear.
In Options360 we continue to look at short-term positions and keep the trades on a tight leash.
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To Your Success,