We face a challenge… On one hand, we know inflation is starting to run hot… and we want to “play defense” to protect our wealth. On the other, we want to continue to “play offense.” And we want to target the kind of gains you’re used to reading about here at the Cut… The kind that can really move the needle on our wealth. But as you’ll see today… we don’t need to give up on the chance of gains to shield our wealth from inflation. History shows there’s one asset class that defends against inflation AND still targets life-changing gains. I (Chris Lowe) will reveal all below… | Recommended Link | | CNBC calls "BitStocks" a "Digital Gold Rush." During the recent Bitcoin bull run, Bitcoin jumped by 900%… But one tiny group of "BitStocks" returned 5,000% on average. Nick Giambruno says, "'BitStocks' will continue to blow the doors off Bitcoin… could be the biggest investing story of the next 6-18 months." | | | -- | First, a warm welcome to new readers… The Daily Cut is the premium e-letter we created for all paid-up Legacy Research readers. So if you’re finding us in your inbox for the first time, you recently subscribed to one of the 13 paid advisories that go out under the Legacy Research umbrella. Our goal is to make sure you never miss a big idea from Teeka Tiwari, Jeff Brown, and the rest of the Legacy team. By “big idea,” I mean something that helps you either grow your wealth… or protect it against threats on the horizon. And we began sounding the warning on the inflation threat long before it hit the headlines in the mainstream press. In our May 14, 2020 dispatch, colleague Tom Dyson warned that the return of inflation was the “most contrarian, most unexpected, most dismissed trading idea right now.” And when Tom’s “rabbit foot” starts to twitch, it’s best to pay attention. He’s been right on several big calls like this before. He turned bullish on gold in 2000… right as the last great bull market was getting going. He also bought bitcoin (BTC) in 2011. The cryptocurrency was trading at just $10 at the time. Tom was spot on with his contrarian call on inflation… At the time, the government’s measure of inflation, the Consumer Price Index (CPI), was running at an annual rate of 0.1%. The most recent reading was 5%. There are two reasons for this. Back to Tom… We’ve had a supply shock. And we’ve got all the stimulus in the system. That’s a potent mix for inflation. Supply shocks cripple the supplies of goods, services, and labor. In this case, the shock was due to government-ordered lockdowns and supply-chain problems. If you cut the supply of something, all else being equal, its price goes up. Plus, we’ve got a central bank and a Treasury Department that would love to see a little inflation. And if they get it, they will nurture it, and they will let it run hot for a little while to make sure it catches on… Tom believes gold is the best way to shield his buying power… That’s why, in 2018, he converted nearly all his dollar savings – roughly $1 million – to gold. And that makes sense… Gold has long been a go-to inflation hedge, along with silver, other commodities, and real estate. Teeka's Crypto Picks Humiliate Stock Gains (And You Can Get His New Pick Free!) Unlike the U.S. dollar, the government can’t print more of these assets on a whim. So they hold their value as the dollar sinks. But scarce assets like these aren’t the only way to protect against inflation. Stocks are also a good way to outrun rising prices. That’s what 93 years of history shows… I recently came across figures from Ben Carlson at Ritholtz Wealth Management…. and they’re eye-opening. Since 1928, inflation has risen at an average rate of 3% a year. And the stock market – tracked here by the S&P 500 – has risen 9.8% a year, on average. This means an investment in the U.S. stock market boosted your buying power by about 7% a year. That’s a decent return. But it comes with a caveat… High or rising inflation is a headwind for stocks... The S&P 500 does better when inflation is low or falling. It’s all in the table below… What’s happening here? When inflation was falling, the average annual return for stocks was 16.5%. When inflation was rising, that dropped to 6.7%. It’s a similar story when you look at the 3% inflation threshold. When inflation was lower than 3%, the average annual return on stocks was 15.7%. When it was higher than 3%, the return on stocks plunged to 6.3%. | Recommended Link | | It's Been Great, Friends The last time Teeka Tiwari identified a trillion-dollar market, it was cryptocurrencies in 2016. And readers who listened could have made gains as high as 15,000%… 48,000%… and even 151,000%. It’s been a great run… Now, Teeka says the world’s next trillion-dollar industry has arrived. This time, it’s nothing to do with crypto. It’s something brand new. On Thursday, July 8 at 8 p.m ET… Teeka Tiwari is hosting the financial event of a lifetime. And getting involved early could bring you 100 years of S&P 500 gains – in a matter of months. Our team caught up with Teeka at a private airport in Boca Raton Florida. To see what’s going on… | | | -- | Let’s pause here to make sure we’re on the same page… In the short-term, inflation tends to dampen the return on stocks. So it’s not something stock market investors pray for. But over the long run, the stock market has outpaced the rise in consumer prices and protected you from inflation. So if you’re worried about inflation, don’t be tempted to sell all your stocks. Chances are, they’ll keep your buying power safe. And that’s just a broad investment in the S&P 500. You can do even better by targeting stocks in sectors that offer increased inflation-fighting power. More about that later in the week… In the mailbag: “Bitcoin is all foam and no beer”… Regular readers know we’re big fans of bitcoin here at the Cut. We see it as disaster insurance against a devalued dollar. And we’re not alone. The Legacy team includes some of bitcoin’s most vocal supporters… World-renowned crypto investor Teeka Tiwari… Silicon Valley insider Jeff Brown… and Casey Report chief analyst Nick Giambruno… all share our enthusiasm for the “king of cryptocurrencies.” But at Legacy Research, we don’t do groupthink. And not everyone here backs bitcoin… Here’s Legacy cofounder Bill Bonner in last Wednesday’s edition of his Diary… As to the usefulness of cryptos as money, we have grave doubts. Not all of his readers agreed with Bill’s take on bitcoin… I have diversified investments in several things, including gold and silver. I also have a limited stake in both bitcoin and Ethereum. To say that these cryptos have absolutely no worth is like saying that stocks are also worthless. As with stocks – which happen to be grossly overvalued at the moment – or anything else, for that matter, including real estate, everything can be over or undervalued, due to many possible variables. And if bitcoin has no value, why do so many businesses now accept it as a form of payment, with more accepting it every day? Even governments around the world are starting to accept it, which should tell you it’s becoming viable as a currency on many levels. – Arthur S. Interesting perspective on bitcoin. But then, if that’s all true, the dollar is even worse. It is also backed by nothing. And further, it is deeply in debt. The dollar isn’t a store of value as much as a store of growing debt. I think the millennials like that cryptos have no debt attached. They are a pure value, although how to peg that value is dubious. – Jason M. I HODL (it stands for Hold On for Dear Life) bitcoin and about fifty other cryptos. I have sent several comments to you arguing over the usefulness of cryptos and their future potential. But I also read your Diary daily and it gives me much thought. Today’s musing that bitcoin may be all foam and no beer is something I have considered frequently. You express my doubts and frustrations with precision. I don’t know if cryptos will live up to their potential, but I want to own some in case they do. – Dale A. I do understand your confusion and disbelief regarding cryptos, especially when you apply staid investment theory, practice, and experience to them and find them wanting. I’ve been there. It seems to me that in order to better understand the "value" of crypto, you lack only a good debate with the most savvy and convincing person in all things crypto: Teeka Tiwari. You may have heard of him. I, for one, would be keen to see who would win the debate, so that perhaps I can find out whether or not I am dead wrong in "HODLing." A debate between you and Teeka would be as enlightening as it would be entertaining to listen to. Who knows whom would be convinced of what… – Alex V. Do you share Bill’s suspicion about cryptos? Is it “all foam and no beer?” Join the debate. Write us at feedback@legacyresearch.com. Regards, Chris Lowe
June 28, 2021
Bray, Ireland Like what you’re reading? Send your thoughts to feedback@legacyresearch.com. IN CASE YOU MISSED IT… The 3-Stock Retirement Blueprint When most folks think about making money through the markets, they think “buy and hold.” They think “diversification.” And they think about investing in things like index funds. But one man has a different approach… It’s called the “3-Stock Retirement Blueprint.” It’s a way to play 3 stocks – yes, just 3 – and potentially make more money than you would by trading all the rest of them… Or by using an old-fashioned approach. Sound impossible? Get all the details here – including the names and tickers of the three stocks. Click here now. 
Get Instant Access Click to read these free reports and automatically sign up for daily research. | 
No comments:
Post a Comment