2 Inflation-Crushing Funds Yielding 7.6%+

- Advertisement -

- Advertisement -

Another day, another sign that the first-tier crowd is (wrongly!) losing its head on inflation—and yet another An opportunity for us to harness those fears for big dividends!

Let’s start with a number the headline-focused crowd can’t go past: 6.2%, which is a jump in consumer prices in October 2021 compared to a year ago.

- Advertisement -

But something strange is happening here – the stock market doesn’t care. While we’ve been hearing about inflation throughout the years, the S&P 500 Even then Jumped 25% in 2021. This is because, as the “dumb money” panicked and sold out at various points during the year, the big institutional players—or “smart money”—stayed longer, and actually bought more.

This is because these professionals are looking beyond the CPI to “JD” inflation indicators such as the 5-year forward inflation expectation rate, an important derivative used by economists and investment bankers.

This metric measures the implied inflation rates of the 5-year Treasury and 10-year Treasury markets, where the most direct and biggest bets on inflation are made by the world’s largest bond traders (we’re talking trillions of dollars here, much larger than the stock market). Simply put, it tells us how much inflation is expected over the next five years.

And, well, things seem pretty old.

…or does it?

While it’s true that this market shows inflation over 2% over the next five years at 2.24%, those expectations are not only subdued but actually slightly lower than they were by several points in early 2010.

In other words, the market is telling us that, yes, inflation will be higher than it was in the past few years, but not by much.

So now what?

If inflation isn’t a big problem, as the mainstream press puts it, what does this mean for markets in 2022?

Above all, the 2021 bull market is likely to continue. Many parts of the economy are still recovering from the pandemic, and this recovery is likely to continue. This means successful funds with great portfolios, such as Liberty All-Star Growth Fund (ASG) And Gabelli Equity Trust (GAB), We are ready to provide more such benefits to the investors.

ASG, with its trailing 12-month yield of 11%, has a significant weighting toward the tech, including top holdings. Microsoft (MSFT), Alphabet (GOOGL) And Amazon.com (AMZN) in its top holdings. GAB holds a substantial portion of its portfolio in equipment and supplies, consumer products and food and beverage companies, as well as industrial stocks.

Since all of the above sectors are sensitive to rising inflation (and interest rates), they should see strong returns if our professionals are right and inflation is not the boogeyman. Meanwhile, the earnings from these funds outweigh inflation (even at today’s high rates), so you have a good buffer in terms of consumer prices. Doing Run longer than expected.

Michael Foster is Lead Research Analyst Contrarian Outlook, For more income ideas, click here for our latest report”Indestructible Income: 5 Bargain Fund with a safe 7.3% dividend.,

Disclosure: none


- Advertisement -

Stay on top - Get the daily news in your inbox

DMCA / Correction Notice

Recent Articles

Related Stories

Stay on top - Get the daily news in your inbox