In Search of the Ultimate Inflation Hedge

When stuff and services get more expensive, your dollars can buy less of them. That’s called inflation, and it’s a problem because investors want to fund future consumption; if stuff gets more expensive you need to save more, spend less, or earn higher investment returns to meet your objectives.

Referenced in this video:

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[alexdoherty]

I love how no matter how many personal finance videos you watch, the best option is always to have a well diversified portfolio

[robertbones]

This is too confusing. I'm just gonna go all in on Dogecoin at 20x leverage.

[robskinnerinvesting]

Ben Felix is the only commentator/youtuber I am aware of that offers genuinely good and straight forward advice.
These videos teach us what we should be learning in school from a young age and aren't taught.

[adrianveress]

This man delivers the best financial content on youtube. No one is even close.

[theondono]

At some point CSI should have a whole episode dedicated to Fama, there’s not a single episode without one of his articles!

[benson]

I'm enjoying the consistent uploads again. I appreciate the great information, thanks! If you're taking requests I'd really enjoy a video exploring your comment regarding the lack of relationship between money supply and inflation.

[fluffyscruffy]

"The money supply and inflation are not related". I would love you to expand on this topic because I've heard otherwise many times recently.

[jaypal]

Well presented Ben. Truly the best finance educator and well presented historical data based on facts..
Thank you Ben and keep up the great work for your audience.

[lsismeiro]

I love to see how Ben really enjoys himself when explaining all this. Keep up the good work!

[SingedAndZoeGaming]

I love how you always end each video with the diversified portfolio money shot.

[fromthebirchwood]

High inflation is followed by uncertainty and panic, making me wonder if it's time to liquidate my $200k portfolio, or maybe consider some defensive investments. I've heard analysts emphasize on value stocks performing good, what stocks exactly can be the ultimate hedge?

[melissaberry]

I always appreciate your excellent data visualizations on these videos

[advancetotabletop]

I lost everything in the last recession and learned from it. I made sure to live below my means and save every possible dollar. I also invested correctly and diversely instead of buying material things, restaurant meals, and expensive vacations. I've been waiting all these years for the next recession so I can capitalize on irresponsible debt. If this video is correct, it will be a very exciting investment shopping spree for me

[jinjurbreadman]

13:56 "the money supply and inflation are not related". this is an interesting statement that flies in the face of what i know. could you do a video on it? It is an important current topic

[tomlopfer]

Well, taking on higher debt / leverage is undoubtedly an inflation hedge !

[Skilliard]

I think an important distinction to make is that in the 70's "Value" companies had little debt, and were considered value because of their high book values relative to price, whereas growth companies often had more debt to fund their expansion, and thus were hit harder by rising rates.

Today, due to a decade of low interest rates leading to unnecessary borrowing, most "Value" companies today have tremendous amounts of debt, but have good book values relative to price because they have a lot of assets that supposedly exceed the debt.

If interest rates continue to rise as they did in the 70's an stay elevated for an extended period of time, this would put value stocks with high debt levels in a very difficult position, and force them to use cash flows to cover interest, reducing future cash flows.

Lastly, price to book doesn't tell the full story of a stock like it used to. If you look at a company like Teladoc, they were trading below book value and were thus included in many value index funds. But in reality, their book value was inflated because of Goodwill associated with what they paid for acqusitions.

Then you also have companies like Microsoft that have tremendously valuable software products they've built that produce tremendous profits, but because they were built in house, they are not reflected on the balance sheet.

I had my portfolio tilted towards value due to my concerns of overpriced growth stocks(companies with no revenue trading at $100 Billion valuations was absurd to me), but I think with the recent correction in growth stocks, a market cap weighted index fund is much less risky than a value tilted portfolio.

[nakofoefire]

Great video, if possible, can you do one on ETFs based on commodity swaps. I am wondering if they have a place in a diversified portfolio (and thus dampen the volatility problem that you described).

[takatsu]

Ben's laugh when discussing gold made me laugh. Whenever some mentions gold as an investment I always think of the crazy uncle who rants about gold being a good investment.

[barttfisher]

The U.S. dollar index (dxy indes) will drop from 103 to 74 as hyperinflation rages. Don't get suckered in because they'll claim inflation is falling coming into the midterm elections only to have it reaccelerate into hyperinflation in 2023.

[veeralpatel]

Again another banger by the one and only! Thanks Ben for the informative easy to understand content