Energy
Energy stocks tend to be resilient in the face of inflation and therefore can put your portfolio on offense. The energy sector, which comprises oil and gas drillers, tends to outperform inflation nearly 75% of the time, resulting in an annualized real return of close to 13%, on average, according to Hartford Funds data between Q1 1973 and Q4 2023.
Gold and Bitcoin
While gold and Bitcoin are commodities, not equities, they each provide investors with unique features that can help shield a portfolio against inflation. Gold has a reputation as an inflationary hedge given the scarcity of the precious metal, as production rates decline and the peak gold debate rages. Known as "digital gold," Bitcoin offers investors similar features, with the amount of new coin supply capped at 21 million. As a result, investors might use either one as a way to hedge against inflation.
In 2024, during a period of elevated inflation, the gold price had a banner year, rising 27% and outperforming the broader stock market. Bitcoin set a record too, surpassing the key $100,000 level per coin and catapulting the flagship cryptocurrency further into the mainstream.
Technology
Technology stocks are capital intensive, requiring a great deal of cash flow to fund operations. Tech stocks are considered growth investments, as investors place bets that they will be rewarded by future cash flow that has yet to be generated. As a result, technology stocks can be punished during an inflationary period as the value of any future cash flow would not be worth as much as it is today, thereby adding uncertainty into the equation.
With high inflation, tech companies are likely to face higher costs on one side and weaker buying power on the other, exacerbated by a dimmed outlook on future profits that add to the challenges. However, not all tech stocks are the same, and investors might want to do their own research to determine which companies are positioned with the strongest balance sheets to weather the inflationary storm better than others.
The Team at Learn Price Action
Tidak ada komentar:
Posting Komentar