Ben Felix is the only commentator/youtuber I am aware of that offers genuinely good and straight forward advice. These videos teach us what we should be learning in school from a young age and aren't taught.
He's either not being honest or dosen't understand Dividen investing , also it's obvious he's oblivious about Golds proce in compared to the S&P 500 historically, and I barely have 20k in Gold, more in silver, but I've known millionaire's in their mid-40's that inherited and or bought gold when they were young, look at the historical price average.
@@Andformerthingshavepassedaway Anecdotal. I know people that purchased homes in 1965 for 12,000$ and are now worth 1.5 million. its meaningless and has no effect on my thinking about buying a home or not buying a home. Gold prices have fluctuated for years but the ceiling was in 1980, doubt you were even born or even close to it. What is the ceiling in stock and bond markets?? None so far. The millionaire people you know would have done way better investing in stocks and bonds. This is pretty simple math. Some millionaires have so many millions that they own all types of assets and investments including gold. But gold and other precious metals as a long term strategy with even a small proportion of your portfolio is an easy to verify lousy investment. Dividend investing is irrelevant for rather obvious reasons. You get a dividend, your share price goes down by same amount of the dividend pay out. Pretty much end of story. Math... no evidence to support that dividend paying companies out perform non-div companies.
I'm enjoying the consistent uploads again. I appreciate the great information, thanks! If you're taking requests I'd really enjoy a video exploring your comment regarding the lack of relationship between money supply and inflation.
I lost everything in the last recession and learned from it. I made sure to live below my means and save every possible dollar. I also invested correctly and diversely instead of buying material things, restaurant meals, and expensive vacations. I've been waiting all these years for the next recession so I can capitalize on irresponsible debt. If this video is correct, it will be a very exciting investment shopping spree for me
Inflation begins when dollars are printed. Printed dollars are a data input to the CPI. The CPI print is the feedback loop from printed dollars. Keynesians have been trying for decades to print dollars to create inflation-used as a signal to show the stimulus is working. Then before inflation gets entrenched, deflate by destroying printed dollars. The problem here is the Fed didn’t remove the dollars it printed to stimulate. So the higher prices are here to stay for a while. The dollar strength is transitory. You will see a weak dollar once those bonds the fed has on its balance sheet become difficult to sell as higher yielding assets will be more desirable to investors.
Consider the economy as one huge engine that produces the life styles that humans live & prosper & create a healthy financially secure future for their families . Corruption, manipulation , creation of unhealthy political policy & diplomatic environments is a recipe for engine failure. People are equally losing money in the financial market in the midst of all these.
Well presented Ben. Truly the best finance educator and well presented historical data based on facts.. Thank you Ben and keep up the great work for your audience.
13:56 "the money supply and inflation are not related". this is an interesting statement that flies in the face of what i know. could you do a video on it? It is an important current topic
@@BenFelixCSI by inflation do you mean CPI ? because it is true that money supply increase doesn't always increase the CPI but it will nest somewhere else. for instance , CPI didn't rise between 2010 and 2020 but all those printed money went to equity and housing markets.
The idea that the money supply and inflation are not related is patently absurd. Unfortunately it sounds like Ben actually believes that garbage. If the two were not related that also means that supply and demand are not a thing, nor are market based economies. Unfortunately it's that same idiotic viewpoint that has caused a large portion of our current inflation. You can't add that much money to the economy and not expect inflation, but unfortunately politicians, and Central bankers, and apparently Ben, all believe in that fairy tale where the amount of money in circulation means nothing. In that fantasy world you might as well give each household a trillion dollars, everyone will be fabulously wealthy, and will be able to buy anything they want. We know that's not actually the case, but it's an expansion of exactly that mindset that money supply and inflation are not related. Of course that's also the premise of UBI, what proponents of all these ridiculous ideas completely fail to grasp, is it goods and services are still limited, and that money itself has no actual value, money is only a medium of exchange, it's a method of exchanging one person's goods or services for another person's goods or services, having more of it is only relevant if it's in relation to other people's money, if everyone has more money the money itself just simply buys less. The important part is the underlying goods and services, not the money. I am really sad that even economics courses no longer teach basic economics. It does not bode well for the future
Oil and energy commodities having high inflation returns makes sense given that they drive a very large share (directly and indirectly) of CPI. Hence, you're buying positively correlated exposure to the CPI index.
Nice video, as always, Ben. But I'm in doubt with one of your arguments, I think you didn't discuss it for the sake of not extending the video too much. Could you explain me or show me some material about why market supply is an outdated way to understand inflation? It makes much sense for me that increasing the market supply without creating wealth is adding demand for the same amount of wealth produced, so this products will raise up their price, leading to inflation.
Great video, if possible, can you do one on ETFs based on commodity swaps. I am wondering if they have a place in a diversified portfolio (and thus dampen the volatility problem that you described).
I think an important distinction to make is that in the 70's "Value" companies had little debt, and were considered value because of their high book values relative to price, whereas growth companies often had more debt to fund their expansion, and thus were hit harder by rising rates. Today, due to a decade of low interest rates leading to unnecessary borrowing, most "Value" companies today have tremendous amounts of debt, but have good book values relative to price because they have a lot of assets that supposedly exceed the debt. If interest rates continue to rise as they did in the 70's an stay elevated for an extended period of time, this would put value stocks with high debt levels in a very difficult position, and force them to use cash flows to cover interest, reducing future cash flows. Lastly, price to book doesn't tell the full story of a stock like it used to. If you look at a company like Teladoc, they were trading below book value and were thus included in many value index funds. But in reality, their book value was inflated because of Goodwill associated with what they paid for acqusitions. Then you also have companies like Microsoft that have tremendously valuable software products they've built that produce tremendous profits, but because they were built in house, they are not reflected on the balance sheet. I had my portfolio tilted towards value due to my concerns of overpriced growth stocks(companies with no revenue trading at $100 Billion valuations was absurd to me), but I think with the recent correction in growth stocks, a market cap weighted index fund is much less risky than a value tilted portfolio.
Hey Ben, great video as always. Would you possibly do a video about the 'deflationary spiral' you mentioned? I don't see why that would be a bad thing, for the currency to deflate.
The last time America went through a deflation was during the Great Depression of the 1930s. People are incentivized to save and not to spend when they believe prices will fall (since they don’t want to buy when they believe goods are relatively expensive.) The problem is that since consumption is aggregate demand/gdp, the economy tanks. Deflation is horrible.
There are so may other ways how gov read inflation like reading from tea leaves, reading form move of birds, reading from clouds shapes. Pretty much as accurate and legit as mentioned in main comment.
Inflation measures the change in price of a basket of goods. Inflation is only an increase in the supply of money if we take the monetarist view of inflation which is not the view taken in modern economics.
"the money supply and inflation are not related" - It would be super helpful if you could help explain this in more detail, as my simplistic view still thinks this way.
You know what probably would help a lot of people ? If you could provide the script of the video ! It’s seriously a lot of very important information which I’d love to collect because I just can’t keep it all after watching the videos couple of times. Especially when there are so many videos with important informations :D pls think about putting it in the description or as a link or something :)
What about banking stocks? When inflation rises, interest rates typically also rise increasing banking profitability. And of course you also get the equity risk premium.
You didn't talk about fixed interest debt. Surely debt is the perfect inflation hedge. If a HELOC for example was used to buy productive assets like stocks you would outperform unleveraged stock returns in inflationary periods since the value of your debt would decline faster than the interest rate.
@@bhok5228 that's an example of irresponsible debt. Most of those mortgages were taken out by people who could not afford the payments and many were adjustable rate or balloon mortgages. Sorta a different beast from what I'm talking about.
@@sandpiperbf9767 You're talking about taking a loan out against your house to invest in stocks. So who are the irresponsible mortgage debtors in your world?
@@CB-so8xd why is it irresponsible to take out debt against your house? That's literally what a mortgage IS. If you can afford the monthly payments and it's a fixed interest mortgage, the extra risk is basically that you're paying on your mortgage for some number of extra years. So... the same risk as being a renter? The risky investments taken out during 2008 were ninja loans where income wasn't verified, and arm loans with balloon payments (per my understanding at least). There a difference between taking out a mortgage you cannot afford chasing rising housing prices and taking out debt against your equity in a house as a portfolio allocation strategy. Don't do this of course if the payments on the debt would be financially unfeasible to your situation. It does add unique risks vs not leveraging at all, but housing loans are the cheapest loans out there and are not callable debt like margin loans. Low fixed interest debt is an inflation hedge, and the size of the loan can be scaled according to people's particular allocation goals.
Even taking out a mortgage on a house, then just investing future income into stocks instead of into paying down a mortgage early already reaps the benefits of this inflation hedge also. It's not necessary to take out a heloc against your equity, but it is a possible option.
Nice to see Ben emoting and moving his body in the more recent clips. He's come a long way from the stiff, wooden monotone delivery of old. Great stuff as always!
@@tman458 causation is different from correlation, there was a lot of stuff going on in 2020 that could explain inflation , not just QE. The pandemic , shocks to supple chains , war , large govt fiscal deficits. If you want to cherry pick this specific time in history to establish a correlation then you’re going to have to find an explanation for decades of QE in Japan , who actually had deflation. You also need to explain why qe has been ramping up in many countries since the gfc unaccompanied by significant inflation until now.
@@739jepthe effect of money supply on price levels is probably the best documented phenomenon in economics, both as time series and cross sectional; prices tend to follow money supply growth.
9:02 - How can anyone read these graphs? Text is tiny and blurry on nearly all the charts. And it'd be great if they used more contrasting colors. Why are two of the three lines blue on this graph? Love Ben Felix videos for their in-depth discussions but please fix these graphs to make it easier for us plebs to follow along!
Another fantastic video, Ben! Thank you! If you're looking for another video topic, I think it would be fascinating if you would make a video analyzing Chris Cole's "dragon portfolio" and the thesis underlying it, please.
Ben I don’t understand, in the paper Best strategies for inflationary times they conclude that Managed Futures Trend is the most robust inflation hedge and also has a positive carry during non inflationary times. Why did you not include that in your video? This view of managed futures is widely accepted in academic finance. Genuinely curious why you skipped over it?
Hello Ben! I love your content, but I'm having a really hard time following your videos. I don't know why, it could be just me. Maybe the presentation could use a bit of an update? I don't mean to criticize, just sharing my feelings.. thank you for your shared knowledge.
I'm not an economist or have any formal finance, banking, economics etc, however I can usually walk away with some a reasonable understanding. Today was an exception as I was non the wiser at the end!
thank god he's back,,man did i miss his video's ..other then Warren Buffet Ben Felix is my second favorite person to listen too when it comes to common sense investing
@Show "thank god he's back,,[.] man[,] did i miss his video's [videos]..other then [than] Warren Buffet [Buffett,] Ben Felix is my -second- favorite person to listen too [to] when it comes to common sense investing[.]" We say "Other than the billion people on the planet, you're my favorite." That's _first_ favorite, not billionth favorite, due to the use of "other than."
Well, measuring anything based on year to date returns is short-sighted at best. For example, Exxon Mobil is up 42% YTD, whereas Nasdaq 100 is down 27% YTD. So clearly, oil & gas are the future, and tech’s best days are over, right?
It seems like the only perfect inflation hedge is some passive tangible asset that produces something you would otherwise have to pay to consume in the future. Like solar panels, improved insulation, or a magic bag that always has avocados inside. These things would have a real return, tax-free, in low or high inflation.
So a house seems like a rather good hedge against future rent consumptions, especially if you pay for it with dept. Even though one has to factor in the costs of maintanance which are of course impacted by inflation.
Hey Ben, I always hear from people that deflation is much worse than inflation. But wouldn't a bit of deflate benefit us here in the US right now considering how high Inflation is right now? Or is there something much worse that I don't know about that comes with deflation?
I'm not an expert, but my understanding is that the basic rationale for deflation being bad is that if people know their money will be worth more in the future than it is now, they will stop spending it. That reduces demand, which forces prices to further drop, meaning that the deflation can quickly spiral out of control. The end result is companies going out of business, people losing their jobs, and economic collapse.
Ben's laugh when discussing gold made me laugh. Whenever some mentions gold as an investment I always think of the crazy uncle who rants about gold being a good investment.
Video audio quality is too low Ben. I had to put my alexa on lv10 to barely hear it. Thanks for the video though. By the way, cheese price has been a good inflation hedge throughout the years :)
Question - how come the rational reminder model portfolio only has a value tilt for small caps? Wouldn't it make sense to overweight value stocks on the large cap side as well?
How is the graph at 1:47 correct? I have seen versions of this, where stocks bring 1000x more than bonds. What is the method for calculation for these returns?
Great video, can you elaborate in another video causes for inflation? does the money supply really have no correlation with inflation? to me, ceteris paribus, an increased supply of anything causes it to love value, no?
Money is not a commodity, so thinking about it like one results in flawed conclusions. That’s a very high level summary. I am planning more content on this later.
Does Managed Futures maybe will save our portfolio from inflation? I think at least they have low or even negative correlation to stocks, even more so on market crashes.
Another probelm with inflation-linked bonds is the assumption that the inflation index will match your inflation concerns. As aggregate inflation rises, the dispersion of the degree of inflation among goods also rises. So e.g. If you're using those bonds to hedge your retirement, they might do a very different job depending on whether or not housing is a concern for you.
Then the definition of inflation itself is a problem. But that's a whole other problem that isn't the issue here. TIPS prevent a retiree from running out of money prematurely in a high-inflation scenario.
@@BenFelixCSI that's because they no longer teach economics in modern economics, the statement they are not related is completely 100% false. And even my 6-year-old can explain why. Money itself has no real value, its only value is in its ability for one person to exchange their goods and services for another person's goods and services. Adding more money to the system does not change the amount of underlying goods and services. Unfortunately politicians, Central bankers, and obviously yourself, have bought into this fantasy world, and have caused the exact situation we are in today with skyrocketing inflation. You, politicians, and Central bankers are in the process of getting a massive wake-up call. The massive inflation that is already started, and has actually been with us for quite a while in the housing sector, should open your eyes. If it doesn't, then that shows that you are not interested in evidence at all, and are solely based on ideological principles, rather than facts. It's really too bad that we have tried to take economics out of education, it has led to very predictable results
@@Green__one Maybe the fact that you have the same view of money as a six year old child should tell you just how deeply you've thought about this issue yourself. The amount of money in bank balance sheets does not directly impact the real economy, although the low interest rates provided certainly could, depending on demand for loans. Circulating money does impact inflation; fiscal policy has a much larger effect on actual circulation of money in the real economy than monetary policy does, while not necessarily changing the money supply significantly. But Ben will probably explain this better than I can.
@@victorgbs you can't explain it, because it doesn't make any sense. And because it's 100% false. The amount of money on bank balance sheets does 100% directly impact the real economy. It causes inflation. For hundreds of years this has been true, and somehow in the last decade economists have chosen to ignore this fact, this isn't based on any science, or any evidence, but purely based on ideology. This ideological view is causing massive devastation right now in the real world. But when you decide to have your monetary policy based on ideology, instead of facts, that's 100% predictable. Inflation right now is not unexpected as ben talks about in this video, every person I've talked to saw it coming, the only people who didn't were Central bankers, politicians, and Ben. When the bank first saw the inflation, they ignored it, then they called it transitory, now they see that it's systemic, but they still don't understand what caused it. Which is precisely why it happened. My 6-year-old knows what caused it, and so do i. The fact that economists can't figure it out just shows the state of our current ideology driven education
How about buying real estate with a mortgage before rates rise further. Won't inflation see the cost of debt reduced, and you lock in cheap financing today? Isn't that the best investment, also prices will increase in inflationary times, but as you've taken a mortgage it's a 4x leveraged trade
I would consider a REIT fund an inflation hedge. The issue is that REITs are also quite volatile. While they mix well with stocks, enjoying a mostly low correlation over time and stock-like earnings, their benefit is over longer periods.
It’s not really throwing them away, it’s just that those theories have been improved upon since they were developed, economics has come along way since 2008 let alone Friedman Economics
My guess: ACWI or VT. More inflation means people have more money to put into the stock market, so these stock prices will grow (or in real terms, remain the same). Plus, whilst individual companies are volatile, the stock market as a whole isn't. Another good hedge is an inflation-adjusted bond. But those are rare. Plus, it only works if CPI figures are accurate.
I think he said a deflation spiral would be good to avoid. The reason being similar to when inflation gets out of control , just in the opposite direction. If prices are falling consumers start spending less because they expect prices to be lower in the future. For this reason amongst others deflation is often associated with weakening economies. Does it have to be bad , no, but inflation isn’t always bad either. There’s a lot of factors to consider
@Fade Ben Felix has a video on REITs published on Aug 17, 2019. You can search for it on this channel. The summary is he hates REITs due to their "idiosyncratic risks."
This is too confusing. I'm just gonna go all in on Dogecoin at 20x leverage.
Update: It's all gone
Bobby bones you can now buy Shiba Inu
20x leverage is guaranteed loss. Do 100x instead.
@@RalphdontGAF at least u tried
Finally someone speaking a language I understand
I love how no matter how many personal finance videos you watch, the best option is always to have a well diversified portfolio
Need to say it louder for all the people that DON'T listen to this lmao
yes
No, lmao. The best option is buying real estate. So many clueless people
@@charlesg7926 why can't that be part of a diversified portfolio?
@@charlesg7926 opinion
My Wednesday is instantly improved
This man delivers the best financial content on youtube. No one is even close.
Plain bagel
Ben Felix is the only commentator/youtuber I am aware of that offers genuinely good and straight forward advice.
These videos teach us what we should be learning in school from a young age and aren't taught.
He's either not being honest or dosen't understand Dividen investing , also it's obvious he's oblivious about Golds proce in compared to the S&P 500 historically, and I barely have 20k in Gold, more in silver, but I've known millionaire's in their mid-40's that inherited and or bought gold when they were young, look at the historical price average.
@@Andformerthingshavepassedaway Anecdotal. I know people that purchased homes in 1965 for 12,000$ and are now worth 1.5 million. its meaningless and has no effect on my thinking about buying a home or not buying a home. Gold prices have fluctuated for years but the ceiling was in 1980, doubt you were even born or even close to it. What is the ceiling in stock and bond markets?? None so far. The millionaire people you know would have done way better investing in stocks and bonds. This is pretty simple math. Some millionaires have so many millions that they own all types of assets and investments including gold. But gold and other precious metals as a long term strategy with even a small proportion of your portfolio is an easy to verify lousy investment.
Dividend investing is irrelevant for rather obvious reasons. You get a dividend, your share price goes down by same amount of the dividend pay out. Pretty much end of story. Math... no evidence to support that dividend paying companies out perform non-div companies.
Personal finance should be a requirement in high school and college.
There's plenty more...the Maverick of Wall St., David Lin, Data Dash,
I'm enjoying the consistent uploads again. I appreciate the great information, thanks! If you're taking requests I'd really enjoy a video exploring your comment regarding the lack of relationship between money supply and inflation.
I'd be interested in that too.
I remember binge watching all of his videos. His channel truly is a gold mine.
Yes, a video about MV = PY, please!!
Yes, would be great to have a video on this point
You guys do know that males zero sense right?
I lost everything in the last recession and learned from it. I made sure to live below my means and save every possible dollar. I also invested correctly and diversely instead of buying material things, restaurant meals, and expensive vacations. I've been waiting all these years for the next recession so I can capitalize on irresponsible debt. If this video is correct, it will be a very exciting investment shopping spree for me
Inflation begins when dollars are printed. Printed dollars are a data input to the CPI. The CPI print is the feedback loop from printed dollars. Keynesians have been trying for decades to print dollars to create inflation-used as a signal to show the stimulus is working. Then before inflation gets entrenched, deflate by destroying printed dollars. The problem here is the Fed didn’t remove the dollars it printed to stimulate. So the higher prices are here to stay for a while. The dollar strength is transitory. You will see a weak dollar once those bonds the fed has on its balance sheet become difficult to sell as higher yielding assets will be more desirable to investors.
Consider the economy as one huge engine that produces the life styles that humans live & prosper & create a healthy financially secure future for their families . Corruption, manipulation , creation of unhealthy political policy & diplomatic environments is a recipe for engine failure. People are equally losing money in the financial market in the midst of all these.
Well presented Ben. Truly the best finance educator and well presented historical data based on facts..
Thank you Ben and keep up the great work for your audience.
13:56 "the money supply and inflation are not related". this is an interesting statement that flies in the face of what i know. could you do a video on it? It is an important current topic
I would say that they are related, but that it's not the only factor contributing to inflation. So yeah I'd say he's wrong.
Don't trust it. Modern monetary theory is broken, and we can see that clearly now that inflation is rampant in US, Japan etc.
I love to see how Ben really enjoys himself when explaining all this. Keep up the good work!
kinky!
At some point CSI should have a whole episode dedicated to Fama, there’s not a single episode without one of his articles!
Kind of like this? ua-cam.com/video/LLbQux2OZjk/v-deo.html
@@BenFelixCSI ha
"The money supply and inflation are not related". I would love you to expand on this topic because I've heard otherwise many times recently.
I’m working on a project that will go into more detail on this.
@@BenFelixCSI by inflation do you mean CPI ? because it is true that money supply increase doesn't always increase the CPI but it will nest somewhere else. for instance , CPI didn't rise between 2010 and 2020 but all those printed money went to equity and housing markets.
@@BenFelixCSI I'd be very interested to see this as well
The idea that the money supply and inflation are not related is patently absurd. Unfortunately it sounds like Ben actually believes that garbage. If the two were not related that also means that supply and demand are not a thing, nor are market based economies. Unfortunately it's that same idiotic viewpoint that has caused a large portion of our current inflation. You can't add that much money to the economy and not expect inflation, but unfortunately politicians, and Central bankers, and apparently Ben, all believe in that fairy tale where the amount of money in circulation means nothing. In that fantasy world you might as well give each household a trillion dollars, everyone will be fabulously wealthy, and will be able to buy anything they want. We know that's not actually the case, but it's an expansion of exactly that mindset that money supply and inflation are not related. Of course that's also the premise of UBI, what proponents of all these ridiculous ideas completely fail to grasp, is it goods and services are still limited, and that money itself has no actual value, money is only a medium of exchange, it's a method of exchanging one person's goods or services for another person's goods or services, having more of it is only relevant if it's in relation to other people's money, if everyone has more money the money itself just simply buys less. The important part is the underlying goods and services, not the money.
I am really sad that even economics courses no longer teach basic economics. It does not bode well for the future
There's other factors, like how often a given dollar changes hands, how much of it is invested, and how much is stuffed under a mattress.
Oil and energy commodities having high inflation returns makes sense given that they drive a very large share (directly and indirectly) of CPI. Hence, you're buying positively correlated exposure to the CPI index.
I always appreciate your excellent data visualizations on these videos
I love how you always end each video with the diversified portfolio money shot.
Nice video, as always, Ben.
But I'm in doubt with one of your arguments, I think you didn't discuss it for the sake of not extending the video too much.
Could you explain me or show me some material about why market supply is an outdated way to understand inflation? It makes much sense for me that increasing the market supply without creating wealth is adding demand for the same amount of wealth produced, so this products will raise up their price, leading to inflation.
Great video, if possible, can you do one on ETFs based on commodity swaps. I am wondering if they have a place in a diversified portfolio (and thus dampen the volatility problem that you described).
Again another banger by the one and only! Thanks Ben for the informative easy to understand content
I think an important distinction to make is that in the 70's "Value" companies had little debt, and were considered value because of their high book values relative to price, whereas growth companies often had more debt to fund their expansion, and thus were hit harder by rising rates.
Today, due to a decade of low interest rates leading to unnecessary borrowing, most "Value" companies today have tremendous amounts of debt, but have good book values relative to price because they have a lot of assets that supposedly exceed the debt.
If interest rates continue to rise as they did in the 70's an stay elevated for an extended period of time, this would put value stocks with high debt levels in a very difficult position, and force them to use cash flows to cover interest, reducing future cash flows.
Lastly, price to book doesn't tell the full story of a stock like it used to. If you look at a company like Teladoc, they were trading below book value and were thus included in many value index funds. But in reality, their book value was inflated because of Goodwill associated with what they paid for acqusitions.
Then you also have companies like Microsoft that have tremendously valuable software products they've built that produce tremendous profits, but because they were built in house, they are not reflected on the balance sheet.
I had my portfolio tilted towards value due to my concerns of overpriced growth stocks(companies with no revenue trading at $100 Billion valuations was absurd to me), but I think with the recent correction in growth stocks, a market cap weighted index fund is much less risky than a value tilted portfolio.
IWQU is a good option. Its stocks have low leverage and high return on equity.
Your videos and podcasts are the best financial advice that exists on the internet.
I'm looking forward to your next video; keep up the great work!
Hey Ben, great video as always. Would you possibly do a video about the 'deflationary spiral' you mentioned? I don't see why that would be a bad thing, for the currency to deflate.
Yes that is possible. I’m working on a bunch of stuff on crypto and this is part of it.
@@BenFelixCSI love it, thanks for all the videos you put out. Has really helped me in my investing journey. 👍
The last time America went through a deflation was during the Great Depression of the 1930s. People are incentivized to save and not to spend when they believe prices will fall (since they don’t want to buy when they believe goods are relatively expensive.) The problem is that since consumption is aggregate demand/gdp, the economy tanks. Deflation is horrible.
Inflation is such a buzzword these days. There are so many ways to measure inflation. Core inflation, consumer price index etc.
Ya. I have another video on that coming.
@@BenFelixCSI awesome!!!
There are so may other ways how gov read inflation like reading from tea leaves, reading form move of birds, reading from clouds shapes. Pretty much as accurate and legit as mentioned in main comment.
Once again, thanks Ben for this video.
I am amazed to see how comments on gold diverge from a professional to another.
Great video as always! I have a question Ben - What about Real estate assets? Aren’t these supposed to be good for inflation?
Another remarkable video! I appreciate the end bit about your opinions and, as always, the strong academic basis for the videos.
Well, taking on higher debt / leverage is undoubtedly an inflation hedge !
Money supply and inflation are not related? Definition of inflation is expansion of money supply.
Inflation measures the change in price of a basket of goods. Inflation is only an increase in the supply of money if we take the monetarist view of inflation which is not the view taken in modern economics.
Very informative. Always great videos from you Ben. Thank You. 😀
What would be a better choice: MSCI World Small Cap Value or MSCI World Small Cap Value Weighted?
Very refreshing information, with low correlation to other finance UA-camrs!
I'd say a strong negative correlation to other fnance youtubers out there.
"the money supply and inflation are not related" - It would be super helpful if you could help explain this in more detail, as my simplistic view still thinks this way.
You know what probably would help a lot of people ? If you could provide the script of the video ! It’s seriously a lot of very important information which I’d love to collect because I just can’t keep it all after watching the videos couple of times. Especially when there are so many videos with important informations :D pls think about putting it in the description or as a link or something :)
Shorting NASDAQ is quite good inflation hedge for me so far ;-)
So how'd that end up
What about banking stocks? When inflation rises, interest rates typically also rise increasing banking profitability. And of course you also get the equity risk premium.
As always you are an source of enlightenment. Thanks for the great info and date (and the chuckle when you mentioned gold)
You didn't talk about fixed interest debt. Surely debt is the perfect inflation hedge.
If a HELOC for example was used to buy productive assets like stocks you would outperform unleveraged stock returns in inflationary periods since the value of your debt would decline faster than the interest rate.
there are so much debt, debt is going to be hardly rebased, it is very dangerous, remember the ninja subprime crisis
@@bhok5228 that's an example of irresponsible debt. Most of those mortgages were taken out by people who could not afford the payments and many were adjustable rate or balloon mortgages. Sorta a different beast from what I'm talking about.
@@sandpiperbf9767 You're talking about taking a loan out against your house to invest in stocks. So who are the irresponsible mortgage debtors in your world?
@@CB-so8xd why is it irresponsible to take out debt against your house? That's literally what a mortgage IS. If you can afford the monthly payments and it's a fixed interest mortgage, the extra risk is basically that you're paying on your mortgage for some number of extra years. So... the same risk as being a renter?
The risky investments taken out during 2008 were ninja loans where income wasn't verified, and arm loans with balloon payments (per my understanding at least). There a difference between taking out a mortgage you cannot afford chasing rising housing prices and taking out debt against your equity in a house as a portfolio allocation strategy. Don't do this of course if the payments on the debt would be financially unfeasible to your situation.
It does add unique risks vs not leveraging at all, but housing loans are the cheapest loans out there and are not callable debt like margin loans. Low fixed interest debt is an inflation hedge, and the size of the loan can be scaled according to people's particular allocation goals.
Even taking out a mortgage on a house, then just investing future income into stocks instead of into paying down a mortgage early already reaps the benefits of this inflation hedge also. It's not necessary to take out a heloc against your equity, but it is a possible option.
The GOAT! Well timed video and the most perfect breakdown as usual.
“At the time of filming: April 24th, 2022”. Interesting, I would have thought this was filmed this week
What about I-bonds from the Treasury?
Boooom Ben Felix maths lesson ♥️
Nice to see Ben emoting and moving his body in the more recent clips. He's come a long way from the stiff, wooden monotone delivery of old. Great stuff as always!
I was looking for answer, and you have it. Thanks, Ben.
Wait, did he just say the money supply and inflation are not related?!
Yep and there’s sufficient evidence and a theoretical basis to support that position
Care to elaborate? 😂 😂 2020 record QE and resulting 40yr record high inflation seems to indicate some correlation between the two
@@tman458 causation is different from correlation, there was a lot of stuff going on in 2020 that could explain inflation , not just QE. The pandemic , shocks to supple chains , war , large govt fiscal deficits. If you want to cherry pick this specific time in history to establish a correlation then you’re going to have to find an explanation for decades of QE in Japan , who actually had deflation. You also need to explain why qe has been ramping up in many countries since the gfc unaccompanied by significant inflation until now.
While Dollar is global reserve-they can print to their hearts delight with no rise in inflation.
@@739jepthe effect of money supply on price levels is probably the best documented phenomenon in economics, both as time series and cross sectional; prices tend to follow money supply growth.
As always: thank you for this very good content. Please keep up the great work.
9:02 - How can anyone read these graphs? Text is tiny and blurry on nearly all the charts. And it'd be great if they used more contrasting colors. Why are two of the three lines blue on this graph?
Love Ben Felix videos for their in-depth discussions but please fix these graphs to make it easier for us plebs to follow along!
Another fantastic video, Ben! Thank you!
If you're looking for another video topic, I think it would be fascinating if you would make a video analyzing Chris Cole's "dragon portfolio" and the thesis underlying it, please.
I’d love to see a discussion between you and Peter Schiff regarding gold ! :)
Ben I don’t understand, in the paper Best strategies for inflationary times they conclude that Managed Futures Trend is the most robust inflation hedge and also has a positive carry during non inflationary times. Why did you not include that in your video? This view of managed futures is widely accepted in academic finance. Genuinely curious why you skipped over it?
Hello Ben! I love your content, but I'm having a really hard time following your videos. I don't know why, it could be just me. Maybe the presentation could use a bit of an update? I don't mean to criticize, just sharing my feelings.. thank you for your shared knowledge.
probably the best personal finance channel, 🙏
I'm not an economist or have any formal finance, banking, economics etc, however I can usually walk away with some a reasonable understanding. Today was an exception as I was non the wiser at the end!
Hi, what's your idea on having some Commodities ETF such as DBC in the portfolio? Will it give protection against inflation?
Great video as always but feel that it should discuss Dalio's All Weather portfolio.
Short term TIPS are the ultimate hedge against unexpected inflation.
Dude! You do fantastic work!!
Is it necessary for interest rates to be higher than inflation to bring inflation down?
I can't share this enough. Great content as always!
Is it me or is the volume on this video a lot more quiet than the usual?
Awesome video content! Next year I'm going to remember this video production especially gold🥇 laughing
Investment has been solved, but the ultimate inflation hedge not so much. That's why diversification is important.
thank god he's back,,man did i miss his video's ..other then Warren Buffet Ben Felix is my second favorite person to listen too when it comes to common sense investing
@Show "thank god he's back,,[.] man[,] did i miss his video's [videos]..other then [than] Warren Buffet [Buffett,] Ben Felix is my -second- favorite person to listen too [to] when it comes to common sense investing[.]" We say "Other than the billion people on the planet, you're my favorite." That's _first_ favorite, not billionth favorite, due to the use of "other than."
Well, measuring anything based on year to date returns is short-sighted at best. For example, Exxon Mobil is up 42% YTD, whereas Nasdaq 100 is down 27% YTD. So clearly, oil & gas are the future, and tech’s best days are over, right?
The information and value of this video is pure gold.... sorry for the pun....
Please a video that explains why money supply and inflation are not correlated. I love you Felix.
Thank you for the video
I’ve seen others comment this as well
But would owning your primary residence (or a rental or two) help hedge inflation
Love the citations :) In the end, how does one prepare for the unexpected? Solid basics. It's true in life for most things.
Ben Felix, I encourage you to add more complexity in this. Add some statistics and calculus please.
It seems like the only perfect inflation hedge is some passive tangible asset that produces something you would otherwise have to pay to consume in the future. Like solar panels, improved insulation, or a magic bag that always has avocados inside. These things would have a real return, tax-free, in low or high inflation.
So a house seems like a rather good hedge against future rent consumptions, especially if you pay for it with dept. Even though one has to factor in the costs of maintanance which are of course impacted by inflation.
@@C4makesParty u
This is just awesome, thank you so much for putting this video together!
Hey Ben, I always hear from people that deflation is much worse than inflation. But wouldn't a bit of deflate benefit us here in the US right now considering how high Inflation is right now? Or is there something much worse that I don't know about that comes with deflation?
I'm not an expert, but my understanding is that the basic rationale for deflation being bad is that if people know their money will be worth more in the future than it is now, they will stop spending it. That reduces demand, which forces prices to further drop, meaning that the deflation can quickly spiral out of control. The end result is companies going out of business, people losing their jobs, and economic collapse.
what do u think of buying VIX?
Why you never considered borrowed real estate property, I think it's a good hedge against unexpected inflation times.
Ben, you didn't consider the best true inflation hedge. Stacks and stacks of US Postal Service "Forever" stamps.
Ben's laugh when discussing gold made me laugh. Whenever some mentions gold as an investment I always think of the crazy uncle who rants about gold being a good investment.
“The money supply and inflation are not related.” Is this still in relation to the quantity of money being the ‘only’ factor?
Volume is pretty low, could you please check the audio mixing next time?
And about the Real State market is a good hedge?
Thanks Ben for this video. Any video planned on Monte carlo simulation to simulate alternate portfolio returns?
Video audio quality is too low Ben. I had to put my alexa on lv10 to barely hear it. Thanks for the video though. By the way, cheese price has been a good inflation hedge throughout the years :)
Question - how come the rational reminder model portfolio only has a value tilt for small caps? Wouldn't it make sense to overweight value stocks on the large cap side as well?
Ideally, yes, but it was done that way for simplicity and to minimize foreign withholding tax for Canadian investors.
You mention that inflation and the money supply are not related (a possibly out-dated notion). Could you make a video explaining and proving this?
Yes.
How is the graph at 1:47 correct? I have seen versions of this, where stocks bring 1000x more than bonds. What is the method for calculation for these returns?
Google CAGR
Great video, can you elaborate in another video causes for inflation? does the money supply really have no correlation with inflation? to me, ceteris paribus, an increased supply of anything causes it to love value, no?
Money is not a commodity, so thinking about it like one results in flawed conclusions. That’s a very high level summary. I am planning more content on this later.
@@BenFelixCSI looking forward to it, thanks. Your videos helped me a great lot, and changed my mind about investing. Keep up the work!
Does Managed Futures maybe will save our portfolio from inflation? I think at least they have low or even negative correlation to stocks, even more so on market crashes.
Another probelm with inflation-linked bonds is the assumption that the inflation index will match your inflation concerns. As aggregate inflation rises, the dispersion of the degree of inflation among goods also rises. So e.g. If you're using those bonds to hedge your retirement, they might do a very different job depending on whether or not housing is a concern for you.
Then the definition of inflation itself is a problem. But that's a whole other problem that isn't the issue here. TIPS prevent a retiree from running out of money prematurely in a high-inflation scenario.
Thank you so much again Ben! Amazing video!
"The money supply and the inflation are not related" How? Can you please elaborate on that?
Will cover in future content. This is not how money is viewed in modern economics.
@@BenFelixCSI that's because they no longer teach economics in modern economics, the statement they are not related is completely 100% false. And even my 6-year-old can explain why. Money itself has no real value, its only value is in its ability for one person to exchange their goods and services for another person's goods and services. Adding more money to the system does not change the amount of underlying goods and services.
Unfortunately politicians, Central bankers, and obviously yourself, have bought into this fantasy world, and have caused the exact situation we are in today with skyrocketing inflation. You, politicians, and Central bankers are in the process of getting a massive wake-up call. The massive inflation that is already started, and has actually been with us for quite a while in the housing sector, should open your eyes. If it doesn't, then that shows that you are not interested in evidence at all, and are solely based on ideological principles, rather than facts.
It's really too bad that we have tried to take economics out of education, it has led to very predictable results
@@Green__one Maybe the fact that you have the same view of money as a six year old child should tell you just how deeply you've thought about this issue yourself.
The amount of money in bank balance sheets does not directly impact the real economy, although the low interest rates provided certainly could, depending on demand for loans. Circulating money does impact inflation; fiscal policy has a much larger effect on actual circulation of money in the real economy than monetary policy does, while not necessarily changing the money supply significantly.
But Ben will probably explain this better than I can.
@@victorgbs you can't explain it, because it doesn't make any sense. And because it's 100% false. The amount of money on bank balance sheets does 100% directly impact the real economy. It causes inflation. For hundreds of years this has been true, and somehow in the last decade economists have chosen to ignore this fact, this isn't based on any science, or any evidence, but purely based on ideology.
This ideological view is causing massive devastation right now in the real world. But when you decide to have your monetary policy based on ideology, instead of facts, that's 100% predictable. Inflation right now is not unexpected as ben talks about in this video, every person I've talked to saw it coming, the only people who didn't were Central bankers, politicians, and Ben. When the bank first saw the inflation, they ignored it, then they called it transitory, now they see that it's systemic, but they still don't understand what caused it. Which is precisely why it happened. My 6-year-old knows what caused it, and so do i. The fact that economists can't figure it out just shows the state of our current ideology driven education
Ben, I hope you do one on tactical asset allocation(I'm not into it, just want your opinion on it).
Great video. Very good research references
How about buying real estate with a mortgage before rates rise further. Won't inflation see the cost of debt reduced, and you lock in cheap financing today?
Isn't that the best investment, also prices will increase in inflationary times, but as you've taken a mortgage it's a 4x leveraged trade
I would consider a REIT fund an inflation hedge. The issue is that REITs are also quite volatile. While they mix well with stocks, enjoying a mostly low correlation over time and stock-like earnings, their benefit is over longer periods.
How about farmland?
OMG “money supply and inflation are not related”. You just throw away decades of economic theory worth several Nobel prizes
It’s not really throwing them away, it’s just that those theories have been improved upon since they were developed, economics has come along way since 2008 let alone Friedman Economics
I wonder how resourse stocks or gold miners etf do
Could you make a video about investment horizons and bond maturity. Seems like it is more nuanced than it sounds
My guess: ACWI or VT. More inflation means people have more money to put into the stock market, so these stock prices will grow (or in real terms, remain the same). Plus, whilst individual companies are volatile, the stock market as a whole isn't.
Another good hedge is an inflation-adjusted bond. But those are rare. Plus, it only works if CPI figures are accurate.
Could you explain your reasoning behind why deflation is bad? Because I strongly disagree.
I think he said a deflation spiral would be good to avoid. The reason being similar to when inflation gets out of control , just in the opposite direction. If prices are falling consumers start spending less because they expect prices to be lower in the future. For this reason amongst others deflation is often associated with weakening economies.
Does it have to be bad , no, but inflation isn’t always bad either. There’s a lot of factors to consider
Thank you Ben!
You explained everything well...but what about REITs?
@Fade Ben Felix has a video on REITs published on Aug 17, 2019. You can search for it on this channel. The summary is he hates REITs due to their "idiosyncratic risks."
I just stumbled upon I-series bonds ...Are they too good to be true?