Start Preparing For Inflation Reversal Now
The next year could make your financial future.
If you play it just half right, you could be set up to make an absolute fortune.
We know there is a massive downside to inflation, recession, and the two combined.
Although it doesn’t seem like it right now, there will be huge upside as inflation winds down.
It won’t be tomorrow, but based on research below, it will be soon.
And you better be ready for it because a fortune awaits on the other side of all this.
How Long Will Inflation Last?
One of the most consistent habits of Wall Street is to extrapolate current trends indefinitely into the future.
It’s the driving force behind epic bubbles.
Every bubble starts out as a reasonable growth story.
Then grows and grows and grows until the herd plows in making a parabolic top.
Same for monumental busts too.
They never predict the turning points.
That’s why we’ve looked at inflation trends closely.
Because with the Fed openly, voluntarily, and unnecessarily driving towards a recession, the best bet is that inflation will subside.
Of course, we’ll note that inflation will not be reduced as quickly as it could be (cutting demand is just half the problem, it could be offset by significant increases in production, especially energy production).
But the top may have been in for inflation.
After all, it’s been building for almost two years now. Official data may show it, but if you buy groceries, you know it’s been building noticeably fast for over a year.
So that puts us two years into an inflationary spike which, historically, is quite long for advanced economies.
This chart from Sam Ro shows how long inflation has lasted in economies where it surpassed 5%:
The chart shows how multiple periods of high inflation have hit a number of different economies over the last few decades .
The average time is about 10 years for advanced economies.
Will the same happen here?
We don’t know for 100% sure because there are other variables too.
Government spending is a wild card. We know politicians will spend as much as they can get away with. But post-election gridlock in Washington would go a long way to slowing down the growth for a bit.
Energy is another variable. Will the regulatory spigot remain closed on building new cheap, reliable energy? Because even if U.S. oil production is allowed to return to 2019 levels, energy prices will fall back to much more reasonable levels.
War? Global industrial sabotage? Again, we don’t know.
But we do know that – all else being the same – inflation may have peaked and could be on the decline for years.
And that could be the start of something truly special for investors.
But there’s one more key variable.
When Inflation Really Becomes "Transitory"
A year and a half ago every consumer saw inflation building at visible levels (and the Federal Reserve was still calling it “transitory”).
They didn’t start hiking rates until February 2022.
They’re always behind.
There’s no reason not to expect them to be behind this time either.
That’s why we expect them to go too far, too fast.
So does the market. It’s why stocks have tanked.
But here’s the thing.
The next few years after this will be a fish-in-a-barrel time for investors.
The Fed will change course, and since it will surely do so after causing much economic damage, it will reignite another epic asset bubble.
The last decade saw bubbles everywhere. Even a few spectacular ones like cannabis and crypto.
They will do it all again.
We’re looking at energy (both carbon and green), copper (a major mine hasn’t been opened since before the pandemic!), real estate, and whatever else the world is going to need.
There could be good times ahead and once inflation turns down, the ride – whether it lasts two years or ten years – is going to be a long and profitable one.
And if you can stick out this market, not give up as many investors will do, there is a fortune to be made on the other side.
And 2030 you will be happy you were thinking like this now.
