In the News: Strategies to Hedge Against Inflation, Overpriced Stocks
Aspiriant’s managing directors Dave Grecsek and Sandi Bragar chatted with a variety of financial media recently about how we’ve been diversifying client portfolios against risks such as inflation, supply-chain disruptions, over-valued U.S. stocks and more.
Read and hear what they have to say.
Dave Grecsek, Managing Director in Investment Strategy & Research, Partner
David was featured in an article about how equity opportunities are shifting from the United States to international markets. He said the positive outlook for international economic growth applies to both developed and emerging markets, and valuations are the reason as U.S. stocks are highly priced right now.
“U.S. economic growth will probably be 6% this year, but how much are you willing to pay for that growth?” he asked. Instead, entering the market in emerging markets is advantageous. “It will be volatile, but if you invest for the long term — 10 years or more — it should yield good returns.”
Dave highlighted four sectors investors should target — industrials, materials, healthcare and consumer staples — as inflation looks like it will continue to rise for months, and many stocks are overvalued in the technology, communication services and consumer discretionary sectors.
“We think that there is the chance that inflation sticks around a little bit more, and industrials and materials are more cyclically sensitive to businesses,” Grecsek said. “And so that’s a good place to be playing offense while avoiding having to really overpay.”
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On November 23, Dave commented on the “exceptional” business growth during the last couple of months in the manufacturing and services sectors. He also said, “A lot of the growth-styled stocks are overvalued.”
Sandi Bragar, Managing Director in Planning Strategy & Research, Partner
Sandi pointed out disruptions that would likely take place if the debt ceiling isn’t raised by December 15. For example, we may see increased interest rates, lower investment returns across the board, hiring reductions and possibly a stock market correction.
She also notes that the government would not have the ability to pay federal wages, Social Security and Medicare.
Sandi told BNN Bloomberg that volatility could be with us throughout next year because of coronavirus variants and Federal Reserve moves to tame inflation, so investors should be careful where they put their money. We see opportunities in Asia (Taiwan and India in particular) as well as parts of Europe.
Sandi spoke about concerns with U.S. company valuations, inflation and labor shortages. In response, we’ve been diversifying investor portfolios with gold, high-quality companies, real estate and value stocks.
In October, Sandi cautioned investors about cryptocurrency and overpriced U.S. stocks while stating that we’re more bullish on international investing.
“The market is like a helium-filled balloon —it just wants to keep going up,” she said in the article.