Inflation can be tricky to predict and manage, so preparing for the inevitable peak is important. While it's impossible to know exactly when or how high inflation will spike, what could investors do to mitigate the effects and protect themselves from the negative consequences of high inflation?
In this episode, Rusty talks with Michael Ashton, Managing Principal at Enduring Investments. Before founding Enduring Investments, Michael worked in research, sales, and trading for several large investment banks, including Bankers Trust, Barclays Capital, and J.P. Morgan. Since 2003, when he traded the first interbank U.S. CPI swaps, and 2004 when he was the lead market maker for the CME's CPI Futures contract, Michael has played a role in developing new instruments and methods for accessing and hedging various inflation exposures.
A leading inflation product and market expert, otherwise known as the "inflation guy," Michael talks with Rusty about the current inflation landscape, some potential scenarios and risks regarding inflation in the year ahead, and what financial advisors and investors can do to hedge inflation.
Key Takeaways
[03:35] - Michael's career history and why he's known as "the inflation guy".
[04:33] - What Enduring Investments does for its clients.
[05:48] - What Michael defines as risk.
[09:39] - How Michael describes the current inflation landscape.
[12:48] - A historical analysis of today's inflationary environment.
[15:38] - How inflation impacts stocks, bonds, and real assets.
[18:49] - Michael's outlook on inflation for the next 12 months.
[21:53] - What financial advisors and investors can do to hedge inflation.
[24:48] - Michael's rule of thumb for inflation hedges.
[31:20] - Rusty's take on today's inflationary climate.
[36:32] - What Michael has to say on Rusty's inflation best-case scenario.
[42:22] - A bad case scenario for inflation.
[50:42] - A few other risks investors should keep in mind.
Quotes
[13:28] - "If you use our current methods back in the early 80s, we ended up with roughly the same level of inflation. The analogy is that it takes years to get the genie back in the bottle, even if you know what you're doing and do it fairly aggressively." ~ Michael Ashton
[18:30] - "In a higher level of inflation, stocks and bonds become correlated. And that's the part that has big portfolio implications and is underappreciated right now." ~ Michael Ashton
[19:31] - "As an investor, it's important to consider what you think will happen versus what the market is pricing and what opportunities the market gives." ~ Michael Ashton
Links
Michael Ashton on LinkedIn
Michael Ashton on Twitter
Enduring Investments
Narco
J.P. Morgan
Deutsche Bank
Barclays
Orion Risk Intelligence
E-piphany
Cents and Sensibility: The Inflation Guy Podcast
What's Wrong with Money?: The Biggest Bubble of All
Connect with our hosts
Rusty Vanneman
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Disclosure
Access to the services presented is provided solely as a service to financial advisors. Orion Risk Intelligence does not make recommendations or determine the suitability of any security or strategy. Past performance of a security or strategy does not guarantee future results. Orion Risk Intelligence research and tools are provided for informational purposes only. While the information is deemed reliable, Orion Risk Intelligence does not guarantee its accuracy, completeness, or suitability for any purpose, and makes no warranties with respect to the results to be obtained from its use.
0143-OAT-1/19/2023
