Suddenly, everyone and their best friend is worried about stagflation.
Long story short, that “transitory” inflation everyone was talking about earlier in the year is proving to be a lot less transitory and a lot more stubborn than anyone expected.
That’s because most of the world’s supply comes from Asia – which remains on quasi-lockdown due to Covid-19 – while most of the demand comes from North America and Europe – which are largely open at the current moment.
The result is this enormous supply-demand imbalance that is pushing prices higher, and keeping them there.
At the same time, the global economic recovery is losing momentum, as supply chain disruptions in developed economies are stifling growth while Covid-19 continues to hamper emerging economies.
The International Monetary Fund just issued a new economic outlook a few days ago, and in that outlook, the world’s leading economists basically said that the global economy is slowing rapidly.
Slowing growth… rising inflation… it looks a lot like the 1970s, which stock market historians dismiss as a “lost decade” due to gripping stagflation.
Now, to be clear, we do not agree with this thesis. We don’t think we are due for a decade of stagflation ahead, or really any period of stagflation. We see Asia coming back online in 2022. We see global consumer demand cooling. We see inflation subsiding and growth normalizing.
All will be fine.
However, we acknowledge that stagflation fears do exist, especially with a potential Fed taper on the horizon, and that’s what is causing so much turbulence in the stock market these days.
Our two cents? Ignore the volatility.
We’ve long told you that the stock market is unnecessarily short-sighted and overreacts to everything. That’s why when we say “follow the smart money,” we don’t mean to follow hedge fund managers – we mean follow venture capitalists.
VCs don’t react to near-term volatility and always stay focused on the big picture. As a result, they consistently double the performance of hedge funds every single year.
Well… what are those VCs doing in the face of rising stagflation fears? They’re pouring more money than ever into tech startups.
While the S&P 500 bounced around last quarter on stagflation fears, global venture funding soared 105% year-over-year to a record-high $158.2 billion.
The number of VC “mega-rounds” – or funding rounds in excess of $100 million – jumped 136% year-over-year to a record 409 mega-rounds.
In other words, VCs are staying bullish on tech in the face of stagflation fears.
You should follow their lead…
Forget stagflation fears. Follow the smart money, and pour into disruptive tech stocks – because, in the long run, they’re going to power through these stagflation fears and soar way, way higher.
That’s why I’d like to introduce to our flagship investment research product, Innovation Investor, an investment product dedicated entirely to investing in the world’s most innovative companies, transformative megatrends, and breakthrough technologies.
It’s a VC portfolio, applied to the stock market.
And, as you know, VC portfolios tend to crush stock market portfolios.
We have the utmost confidence Innovation Investor will do just over the next few years. And now… well, put frankly, right now represents the best time to join our research advisory.
Because, when you’re invested in world-changing companies, near-term weakness is always a buying opportunity.
Right now, we have one of those opportunities.
Editor, Hypergrowth Investing
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.