About a week ago, I ran a series of essays in which we took a deep dive into the inflation story of 2021 — and the three powerful forces behind it:
- A massive, new QE campaign.
- Off-the-charts government spending.
- Major supply-chain constraints that are causing commodity prices to soar.
The long-running “inflation drought” has ended, I said, noting that the Consumer Price Index (CPI) climbed 5.0% over the last 12 months. That’s the largest bump since the 5.4% increase for the year-long period ending August 2008.
Moreover, the core-price index, which excludes categories with high volatility like food and energy, increased 3.8% in May from a year prior. That was the largest such increase since June 1992.
Clearly, inflation isn’t good for much. It squeezes profit margins and undercuts the value of our savings. It makes most of our wealth worth less.
So, in the second of those essays, I showed you one way we can protect ourselves — and potentially even profit — from the ravages of inflation.
Here’s the Stock Symbol of Eric Fry’s Next 1,000% Winner
I proposed that gold will continue to offer a store of value for decades to come and said it could provide at least partial protection from any serious bout of inflation.
In an email from earlier this week, Brian Hunt, the CEO of InvestorPlace and my publisher, proposed another solution to the inflation crisis.
That email — which he sent out to InvestorPlace’s analysts and executive team — made me take notice.
While his “inflation buster” is something we talk a lot about here at Smart Money, he framed it in such a way that it made me want to show his thoughts to you.
I asked Brian if I could share his email with you all, and he agreed.
So, the rest of this issue comes from him. Take it away, Brian…
A Message From the CEO
When it comes to the “inflation/deflation” debate… and knowing how debt and demographics drive the economy…
One of my favorite analysts/investors to pay attention to is Lacy Hunt (no relation).
Lacy has been right on interest rates for a long time. He points out how the U.S. economy is so loaded with debt that economic growth over the past 20 years is way below its historical trend.
Lacy recently pointed out how:
From 1870 to 1997, real per capita GDP advanced 2.2% per annum, the growth since then has only been 1.2% per annum.
Most people don’t know how U.S. GDP growth is way down from its historical trend.
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Compared to our history, the economy is kind of in stall speed.
I think this makes investing in technology and other high-growth areas even more compelling.
Huge parts of the U.S. economy are barely above stall speed and have been for a long time. Many industries and areas have struggled.
However, some places have done phenomenally well. Some industries and some stocks have done phenomenally well.
This is the “Technochasm” that Eric talks about all the time in his Smart Money e-letter and Fry’s Investment Report newsletter. And it’s why he and our other analysts recommend so many small, innovative, fast-growing tech companies to our readers.
I wish I could be the bearer of better news.
I wish I could tell you that the U.S. has generated 3.5% real GDP growth for the past 20 years.
But it hasn’t.
Instead, GDP growth has been way below trend. That’s because we’ve loaded the economy with debt and that debt is acting as a drag. (If you want a full education on this, just google Lacy Hunt and some terms in this email.)
We just don’t live in the “super boom” high-growth eras of the 1950s and ’60s or ’80s and ’90s.
The country’s economic car is carrying too much dead weight.
“The Alternative Is Far Riskier”
This makes it more and more important to focus your investment dollars on industries that are generating awesome growth.
They are the only places that will allow you to achieve “financial escape velocity”… to get your portfolio doing well despite the coming tax increases, despite any currency debasement, despite inflation, and despite the U.S. economy growing at a rate that is way below its long term trend.
Some might say that allocating a huge portion of your portfolio toward tech and innovation is too risky.
I say the alternative is far riskier.
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Tech and innovation is the only area that is generating a lot of wealth and growth. So much of the rest of the country and economy is just barely doing better than treading water… while the government debases the currency.
So many people are losing wealth and don’t realize it. So many people are like frogs in a boiling pot of water.
Things appear to be great. But for a lot of folks, they are not. And this Technochasm will only grow wider.
On this topic, some incredible charts below…
Tech vs. traditional banking, past 15 years…
Tech vs. oil and gas, past 15 years…
Tech vs. transportation (airlines, shipping, rails)…
Tech vs. manufacturing, 15 years.
Tech vs. insurance, past 15 years…
Tech vs. Warren Buffett, past 15 years…
Keep in mind that the profits you’re making from stocks are buying you less and less these days. Less medical care. Less college. Less house.
That’s because of mass currency debasement.
That makes outperformance more and more valuable.
And that’s why everyone should be reading Fry’s Investment Report and our other tech-focused publications.
Regards,
Eric Fry
P.S. How a Small Group of Stocks Could Make $100,000 or More in the Next 12 Months…
I recently teamed up with famed investor Louis Navellier to reveal how there’s a rare setup in the markets that will destroy millions of retirements… but it could also send a small group of stocks soaring and hand you $100,000 or more.
NOTE: On the date of publication, Eric Fry did not own either directly or indirectly any positions in the securitizes mentioned in this article.
Eric Fry is an award-winning stock picker with numerous “10-bagger” calls —in good markets AND bad. How? By finding potent global megatrends… before they take off. In fact, Eric has recommended 41 different 1,000%+ stock market winners in his career. Plus, he beat 650 of the world’s most famous investors (including Bill Ackman and David Einhorn) in a contest. And today he’s revealing his next potential 1,000% winner for free, right here.
