Does High Inflation mean DOOM for your investment portfolio?

Inflation is UP and stock market returns are DOWN... is this a sign of worse things to come? Have we seen something like this in the past? How has the stock market responded previously? Let's help YOU understand the best plan of action moving into an unpredictable future.

The 1940's saw some very high inflation

1946 8.5%

1947 14.4%

1948 7.7%

WHAT DID THE STOCK MARKET DO THOSE YEARS?

1946 -12.05%

1947 14.4%

1948 7.7%

WHAT ABOUT STOCK MARKET RETURNS FROM 1945 - 1950?

Total return of 117.30%

Annualized return of 13.81% per year

$1,000,000 would have grown to $2,172,970

Let's look at a different time period of high inflation

1979 11.3%

1980 13.5%

1981 10.3%

AND THE STOCK MARKET RETURNS THOSE YEARS?

1979 17.12%

1980 26.02%

1981 -7.22%

and... a down 1981 followed up with a positive 30.11% in 1982

SO DOES HIGH INFLATION GUARANTEE POOR STOCK MARKET PERFORMANCE?

Not really. There is a chart shared in the video at the 1:52 mark that bares this out even more than the data above.

LET'S BROADEN OUR GAZE TO A LONGER TIME PERIOD

When investing in the stock market, most should be doing so with a long time horizon. NOT, trying to maximize returns in any one year.

1990 - 2021 (Inflation facts)

Highest inflationary years were:

1990 5.4%

2021 4.7%

1991 4.2%

2008 3.8%

Highest inflationary months saw:

7%

6.3%

5.6% (a few times)

Long term average inflation is 3.27%

77 of the 384 months over this time period had inflation higher than the average.

That is just over 20% of the time.

1990 - 2021 (Market facts)

Long-Term Government Bonds 7.8%

Long-Term Corporate Bonds 8%

S&P 500 Index 10.8%

CRSP 1-10 Index (Nearly all US Stocks) 10.9%

MARKETS REWARD DISCIPLINE

From 1970 to 2021 $1 would have grown to $98 dollars despite:

Inflation

The quadrupling of oil prices

The Dow dropping 23% on Black Monday

War

Hurricanes

Income tax rates rising

Y2K

Asian currency crisis

Russian financial crisis

9/11 terrorist attacks

Subprime mortgage crisis

Brexit

Covid-19 pandemic

A disciplined investor looks beyond the concerns of today to the long-term growth potential of markets.

Sources & Disclosures found in the video link on Youtube