My Take: Inflation is Here, Now What do You Do?

March 16, 2018 By E.J. Smith - Your Survival Guy

By Andrey_Popov @ Shutterstock.com

Originally published February 15, 2018.

Surprise! When there’s too much money created by central banks, inflation is the obvious byproduct. This isn’t rocket science, although bankers have the ego to believe that it is.

Pure and simple, inflation is a monetary event. Picture a car flooded by too much gasoline—it doesn’t work—and you realize the predicament investors are in thanks to the Federal Reserve.

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It’s why you keep your bond maturities short-term and hold on to your GNMA.

Yes, rates need to be higher. And perhaps there will be a time to invest in bonds with longer maturities. But I’m not in the timing business.

At the end of the day, when times are tough, the politically charged central bankers lack the will to dramatically increase rates to a level they should have been at years ago. That doesn’t mean they won’t chip away at the problem to save face. This is politics after all.

In the meantime, continue your course of adding to your bond component strategy, especially when prices are down.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.

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