Let's Talk Inflation (And How It Will Impact Your Portfolio)

You've probably heard the news about rising inflation, but before you go and sell your stocks, let's paint the whole picture.
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DISCLAIMER:
This channel is for education purposes only and is not affiliated with any financial institution, although Richard does work as an employee for an investment manager. Richard Coffin does not provide recommendations on The Plain Bagel - those looking for investment advice should seek out a registered professional. Richard is not responsible for investment actions taken by viewers.

[@83jbbentley]

The jokes on them I bought 10 sheets of plywood. Gonna be rich boys!

[@malydok]

Buy high sell low. The lumber market is already stabilizing, so impecabble timing there, friend!

[@samuelb7546]

Where do you live? I have an armed mob with pitchforks and tar and we are coming for that plywood.

[@homechefmillennial4613]

Can we make a plywood 3x leverage ETF? Deutsche bank may be interested

[@vengefulspirit99]

@@homechefmillennial4613 Slap a spreadsheet somewhere and Softbank is onboard as well.

[@AllYourBaseAreBelongToU5]

@@homechefmillennial4613 Can I short plywood?

[@jeezrick2748]

Inflation is just like a hangover, just keep drinking and you won’t notice it

[@cash3551]

genius

[@elrot6687]

Yeah and sometimes if you drink one to many you will end up hospitalized, just like the market

[@renanfelipedossantos5913]

It's been working wonders for Argentina and Venezuela.

[@orion10x10]

@@renanfelipedossantos5913 I'm stacking a bit of silver just in case

[@randuinsomen5480]

Bahaha underrated comment

[@G33KST4R]

I'll just stick to what works for me: Buy high, sell low.

[@jacobnair6707]

Outstanding move

[@BusterDarcy]

I lol’d

[@user-yx5pd7yi8o]

I just take a stock i hear about on youtube or reddit. Yeet all my money in there and hodl.

[@Lonovavir]

Don't forget to buy stocks with borrowed money for maximum inefficiency.

[@rogehmarbi]

Buy low sell lower is my mantra

[@greg6379]

LOL, stock prices rising? Not when I'm the one picking them :)~ Seriously though, great video.

[@leonleon2021]

At least all my stock went green thanks to inflation, can't complain tho.

[@GHOST25938]

Can i get a live Ticker of your Longs? Might be a good reversal indicator For my Short Strategy 😂

[@DubCmusicTV]

Hold longer

[@scottydog9997]

lol, yeah just bought Goldman Sachs at the top, while institutions are divesting..... Will probably have to wait a few months for it to return, even though the fundamentals are good.

[@kenneth_mirez]

Bro you're blessing to us aspiring investors. Thank you for taking the time to do research and sharing your knowledge to us. This is just as good as reading finance books. I hope you keep doing what you're doing!

[@davidtobar9519]

Thank you for offering down to to earth and honest information. Your videos are always a welcome breath of reality compared to what most people are putting on youtube.

[@JiLong7511]

“Have faith in the fact that those companies will likely continue to grow” - definitely not the ones I have faith in.

[@loangxuong9863]

I have faith in the fact that those companies will likely not declare bankruptcy in the future.

[@JordanLui]

Excellent video! This has given me a better understanding of inflation that anything I've read before. Thank you for taking the time to make these videos! Very educational!

[@pnkrckmom]

I know you're busy with little Henry and all, but your videos are the best and I wish there were more of them! Loved this one, thanks!

[@David.Marquez]

This is probably one of the better breakdowns of what CPI and inflation really mean and entail. Awesome video!

[@yannickmiller5477]

Great video! Thanks for making this content, one can really tell that a lot of time and effort goes into producing it.

[@annakrichevsky2779]

I think there is a simpler argument in favor of stocks during high inflation periods. Lack of alternatives. Yes, stocks may slow down their growth and even yield negative returns. But would those returns be worse than the ones of cash or bonds?

[@Anonymous-md2qp]

Still better than cash and bonds. Just hold them and ride it out, if time is on your side.

[@l-b01josefandres44]

Not entirely if you're focused more so on returns then sure bonds are worse than stocks, but if you weigh in stability then I'd say they're on an equal putting with each other.

[@zeryphex]

This is why people speculate in crypto-currencies. Like you said: there is lack of alternatives / there are no alternatives.

[@l-b01josefandres44]

@@zeryphex their are a lot of investment alternative eg. commodities, stocks, bonds, mutual funds and etfs for the passive sense, after that real estate. Crypto's only advantage over said alternative is that the initial investment is pretty low like super low.

[@aj2228]

@@Anonymous-md2qp the government guarantees bonds, but the fed guarantees stocks. The fed has never done this in the past. Buy stocks, invest in the fed's money printer.

[@huskiefan06]

Another reason why most US Total Market Index Funds / ETFs are my favorite long term investment.

[@Deltron6060]

Smart man.

[@jamesbaxter222]

What would you say about the newer total market funds like fidelity zero total market fund? Does the zero fee mean that this fund isn’t being serviced like the other ones that does have fees. What’s the catch? Is it smart to invest in new funds that have little history?

[@kevinklassen4328]

The only problem with your approach is you're not diversified by only investing in the US market.

[@huskiefan06]

@@kevinklassen4328 At least 44% of total sales for the S&P 500 come from international sources, inferior foreign accounting standards, added currency risk, & higher expense ratios don't make it worth it. Pass.

[@huskiefan06]

​@@jamesbaxter222 FZROX is good, but I prefer FSKAX because of a few reasons. FSKAX has 2 dividends per year, vs FZROX's 1 dividend per year. Currently, FSKAX has 3658 holdings vs FZROX's 2635 holdings. Honestly .015% expense ratio is essentially free for FSKAX. Its even beats Vanguard & Schwab, which is tough to do! Can't go wrong with either, but I just prefer FSKAX.

[@nedflannels3278]

Great video. Thanks for making me a confident investor Richard. Always good quality unbiased information put into simple terms!

[@jivillain]

I love hearing you explain things. It’s crystal clear

[@9900killer]

I love your videos man. Thank you for the quality content and information :)

[@denisplouffe514]

Thank you for an excellent explanation on inflation and how investors respond to the challenges it presents.

[@amsalmeron]

Great video as usual! I find it really funny that investors in developed markets have to learn what inflation is, because here in South America it's never really gone. It's truly another world entirely.

[@TheJustinBarker]

Thanks for the great points about inflation!

[@Green__one]

Great video. I love that you quoted actual studies in this one. Felt a bit more like a Ben Felix video there.

[@Ofir]

Thank you for another interesting video! I like your new style of editing / effects :)

[@tradertim]

Dude your channel is the best for mature investors

[@nrpbrown]

Great video, Mr. Bagel!

[@bilbobeutlin3405]

Can you explain the repo operations by the FED? I tried looking into this and have some idea what's going on but it's hard to understand and I don't know 100% what it means for the economy as a whole

[@analienfromouterspace]

It is pretty simple, repurchase what you sold. In this case, the government issue bonds, then they sell them in terms of borrowing by banks to finance their operations. When the rate goes up or down, the seller might think of buying them back, same thing to stocks where companies will buy their own stocks. The effect could be either negative or positive depends on investment type.

[@bobbygushlinger3637]

Love the Plain Bagel!

[@JosephDickson]

Not concerned, I'm a Boglehead. "Don't look for the needle in the haystack. Just buy the haystack!" - Jack Bogle

[@pranavshrestha4953]

So have you been putting in the money recently/ Do you follow SIP or are loading up for the anticipated big dip?

[@rhn6075]

60% VTI and forget

[@tomasz4101]

@@pranavshrestha4953 Load up for dip, we are already seeing Vanguard and other index funds losing in value. Stay patient is essentially what im trying to say, the dip has just begun in my eyes.

[@pranavshrestha4953]

@@tomasz4101 My only concern is something like in 2008. If we were to make fresh investments in VTI in early 2008, it would take 4 more years just to breakeven.

[@joetyler835]

@@pranavshrestha4953 who invests just for 4 years anyway? That's why investing is a 10-30 year process. Unless you're old and retiring, then that's unfortunate.

[@neal2049]

Good stuff mate, been definitely thinking about how inflation could affect my meme stock portfolio.

[@ecpgieicg]

Very good coverage. Congrats on making another good video. (Was hoping to see more warning re gold though. Gold faces the danger of tapering.)

[@panagiotisanastasopoulos107]

Thank you for the very interesting video!

[@oriond7602]

Fresh off just watching "Inside Job" this week - Martin Feldstein showing no emotions regarding unregulated credit default swaps causing the GFC was chilling & psychopathic.

[@kevinhartz5513]

r/superstonk made me find that awesome film

[@Pogomeerschweinchen]

Thank you very much for this fantastic piece on Inflation!

[@mahdi5796]

great video. I haven't seen anyone explaining DCF better than you.

[@kenken4942]

No one can predict the future John Bogle: Stay the course

[@khangaroofinance]

Great Vid! loving the content

[@Andrew_Sherman]

Great job! Fantastic video. Holistic approach rather than reductionist is the best.

[@blibdoolpoolp]

Buying gold is dense right now, literally and figuratively

[@bagybachi]

You’re good. Thanks

[@investingbookhighlights5007]

Thanks Richard. 🙂 Always well explained. 👍

[@FinancialShinanigan]

Guess I'll finally call that number on those gold commercials.

[@doksher4771]

Great video. Thanks!

[@PlayfulDance]

long answer: video short answer: buy the dip when inflation hits, and bet on inflation return to normal

[@venictos]

You're the real MVP

[@christophkral191]

And if I don't invest into stocks I will lose even more because of inflation!!

[@ratopetista4508]

@@christophkral191 stocks are overvalueted right now see the indicator of warren buffet.

[@supert5]

Thats what I got out of video. Waiting for that most delicious dip of the century.

[@giovannip8600]

@@ratopetista4508 yes, but he also says to not try to time the market, and to not wait even though it might be overvalued

[@simba9825]

7.8% inflation?? That's a Tuesday in some countries.

[@traptunnels8949]

I really love your content.

[@piggiepower]

Great video, your a good teacher dude

[@puddles1364]

You came at the right time!

[@Zaerki]

Richard throwing down gems for us here

[@samsonsoturian6013]

As always with US economic problems, the amount of concern and doomsday speculation is way out of proportion to what's happening.

[@lubu2960]

BUT HYPERINFLATION, VUVZUELA AHHHHH

[@Mark_Jacobson81]

Hope you’re right but when the when the fed is buying up $120B per month of toxic assets to keep the market afloat, it should probably ring alarm bells. But then again the usd is the reserve currency and they can just print at will, so who knows how long this can go on for. Seems like they’ll just need ever increasing amounts of capital to curb any problems which will lead to even larger deficits and painting themselves into a corner with things like tax payers maxed out , interest rates being less useful so funny money really is their only tool.

[@samsonsoturian6013]

@@naddarr1 I have a meme of the doom guy with the caption Ok, Doomer for just such occasions.

[@scipionyx]

TSMC and other chip manufacturing delays was a big hit. Nice to see more videos about inflaiton

[@Hustle_And_Grow23]

Excellent video man! 🔥🔥

[@zedjacob8065]

As a business student, I just want to ask if you can put your journal sources in the description? Great video as always.

[@alvarogomez-mena4155]

For the time being, I'm going to load up on growth/tech stocks until the FED decides to raise rates. J Pow said the tapering will start to happen soon (in a few months) and rate hikes are expected to happen in 2023. So until then, I'll continue to load up on those positions. Maybe in a few months or so, I'll start adding to my high dividend yield positions again.

[@aj2228]

he didn't say rate hikes for 2023. He said interest rates will remain at 0% until at least 2023. he's kicking the can down the road. he hasn't said anything. money printer go brrrr. invest in money printer.

[@VitalXtreme]

Just remember, its not about timing the market, instead its all about the amount of time in the market.

[@tiempoz3965]

Its about the time holding GME 🚀

[@DatBoiLui]

@@tiempoz3965 $SoFi 🚀🚀🚀🚀

[@successfulusername]

Just decided to enroll for the CFA. These videos are incredibly helpful. What are the chances that you will release CFA ‘study guides’?

[@Mawesome111]

I’d recommend you to check out Mark Meldrum’s channel.

[@DubCmusicTV]

Mm vids for ethics I've heard. Use schweser for all levels. Level 1 schweser is sufficient.

[@Mawesome111]

@@DubCmusicTV not really. I’ve passed level 1 using MM as well as Schweser.

[@DubCmusicTV]

@@Mawesome111 okay. I'm speaking from my experience. I finished in 2015. didn't hear about MM until 2020

[@Genie_]

Just INVEST IN NIO

[@Financial_Revolution]

The relation is between money supply and stock valuation. High inflation ( because of money printing + sometimes supply side) response is higher interest rates. When they go up they suck cash out of the system which translates into lower demand for everything. Stocks react preemptively with lower valuation of future revenue inflation adjusted. That’s why real rate of growth tend to be negative like in 1970s 8:53

[@marekblahusiak4841]

I consider the black to white contrast of the current (generally) overblown PE ratios (as a result non-existent interest rates and flooding money supply) with the PEs to be seen after upcoming increase of the interest rates & halting of the free money supply as a starting point to think on how its likely going to play out for stocks short to midterm.

[@matias86532]

your videos are great

[@rishiarora3589]

2022 - hold my coffee ☕️ or beer…. 🍺

[@jonahdill-dascoli4584]

I would love to hear your thoughts on how China plays into this on a macro level. Seems to me this is the first time we have a real competitive trade advisory who has learned from the past. They have a lot of control over where inflation happens because they still manufacture most component parts. Also the UAE, Saudi, OPEC oil deal that has long range implications on the inflationary environment. It seems that this is is the first time the US and the west are not in complete control of their financial and inflationary situation.

[@shantanusapru]

Please do a video on quant or algorithmic funds. Thanks!

[@ahsugoi]

That multiple contraction point on performance is pretty important.

[@jacobnair6707]

Thanks!

[@ramimorrison5420]

Great video!

[@sanjeevghosh7653]

Good topic 👍

[@dylant830]

Isn't the cpi graph you showed at the beginning year-over-year? Meaning that inflation only went up by those percentages because the effects of the pandemic started ~12 months before April and May, causing prices to go down as demand for consumer goods decreased?

[@ThePlainBagel]

Yes! I wasn't overly-clear with that point, but I did try to address it at 4:50. But yes inflation was low (and by some measures negative) during the pandemic, so y/y measures have a low base.

[@rowanharley9810]

@@ThePlainBagel The CPI was negative by 1%, following a 0.6% decrease the month before that. If you measure from a deflationary time to an inflationary time, you're going to see a big YoY number.

[@anonymousa6646]

Hey, I like your videos, and I found them fascinating. But I’m a non-native speaker, so I don’t get the whole idea since you’re speaking fast and no CC is provided. I will appreciate it if you consider adding a CC. I’m looking forward to learning from you more and more.

[@therapturedmichelle]

👍👍👍👍👍 Thank you so much!

[@KopiLp]

Really good video. 👍

[@garcia4062]

Gracias!

[@jacobhenriksen4715]

Great video. Can you do a video about the dangers that derivatives presents to financial system?

[@Alpha-zo5ix]

No

[@MrSpenceju]

Great video

[@galandoftruth6730]

Yeah I just been adjusting my portfolio and calculating my risk. I'm not exiting the market yet I'm buying different sectors for the future. And cost averaging down.

[@yipikaye]

Deat @plain bagel, can you do a video explaining how company growth and value doesn’t necessary always reflect on the price of their stock? Or am i wrong?

[@fcalth]

Mr. Bagel, In a future video can you address the process/situations that occur when one of your stocks gets bought out? For context, I just found out that one my stocks was bought out and I am very confused on how that affected me. It looks like I loss money, and so I am unsure on what I should have done in this case. It also looks like my ownership of this stock did not get transferred to the company that bought out my stock. Why is that? Is that even a possibility/option during buyout periods?

[@MADMAX7330]

The 5% figure is year over year growth, where this time last year, Inflation dipped by 2% to an all time low in 10 yrs. So, of course the YoY figure now would look high.

[@Crf-nr9jy]

April had the highest single month core inflationary increase since 1982. May had an annualized rate of around 8% as well. Prices are increasing rapidly but the earlier part of the year artificially lowers the annual inflation rate. As more of those number are dropped inflation will increase on an annual basis. The question is does it last.

[@vancejoy3724]

Novice here! So if there's an outflow of money from the dividend space, and that lowers the price, wouldn't the yield increase accordingly? Also, assuming you're in the market for longer than the high inflation lasts, wouldn't this just mean you are buying the dividend stock for cheaper? I imagine the dividend paid in the interim will be worth less in purchasing power due to increased costs of goods.. But if the cost of the 'good' you intend to buy is just more of the dividend stock at this cheaper price, are you harmed by this?

[@ThePlainBagel]

You are correct on both counts! And during the 1970s dividends did actually grow to match inflation, so like profits dividends didn’t lose any real value. But because there’s that short term uncertainty people do tend to sell out of the area

[@Vaughnfriday]

my brain is wobbling like a bobble head after this video

[@plamenvasilev641]

Do you think it's a good idea to short the market with etfs as VIX or VXX?

[@Dfm_Sushil]

Dear team please make one video about timing the market, is it possible? If not why? Why how ....???

[@Justice4x]

hey richard, thanks for putting up baller content for noobs like me. because of you, i can finalize realize my dream of becoming a wall street shark

[@gabrielgonzalez6456]

From 1975-1981 the dividend stocks were at its highest from 4-6%, currently we have the lowest overall dividend returns in the last 140 years at 1.5% or so. So if one invested in the S&P on top heavily dividend funds you would’ve pulled in positive. Plus CDs were paying 10-15% as mortgage interest rates climbed to 18% at its peak in 1981. It was a totally different market. House median prices were 30-50k but one will pay $700-800 or more mortgage for a 30 year fixed rate. Making a really nice salary of 20-25k a year. It was as like making 70-80k a year in today’s market. Most people don’t realize the mortgage interest rates when they say how houses were so cheap. Until 1990 interest rates didn’t go below 9-10% and in the 1990s it was 7-8%

[@ChocolateMilkCultLeader]

This is amazing

[@stevelester549]

How will inflation effect REITs?

[@WingofTech]

The intro of the video is feeling a bit more relatable today. Hopefully inflation slows if the consumer recedes.

[@wahyuramadhan195]

Hmm thanks

[@jesussalomon3598]

The market did pretty well today (fri nov 12th) but I got a message saying we might see a snap pretty soon due to inflation fears.

[@samsonsoturian6013]

Note on higher used car sales: During downturns people tend to buy less cars, and when they do buy cars people often buy used cars.

[@jeffreytackett3922]

"tend" and "often" isn't generally indicative of good research.

[@samsonsoturian6013]

@@jeffreytackett3922 obviously, not everyone is buying used cars all of a suddenly. These are consumer trends, statistical facts, nothing more.

[@gudipatiramu5984]

In summary, Just HODL

[@Dayvit78]

in other words, like always.

[@627horsepowers]

Purchased a little bit of equities today.

[@georgewright9914]

NPV & DCF as an accountant I like that

[@MariusNinjai]

what would be the best think to do with money i don't like the index funds i think they are over inflated and don't feel safe placing money in them

[@gustavobuquera]

If you want to study inflation, then you HAVE to study Latin America, Brazil specially.

[@DIGIOVINAZZO]

Argentina even more

[@gustavobuquera]

@@DIGIOVINAZZO Well Brazil has actually succeeded dealing with hyper inflation in the past and has it in control for 30 years. Argentina is just getting real time fucked by it, a great oportunity nonetheless.

[@renanfelipedossantos5913]

Plano Real is the way to go.

[@Alpha_blossom]

How long til I need to start buying inverse $SPY calls?

[@lauraigla6319]

I'm sure inflation will ease. But I'm also sure the $400/month hike on childcare I've had to deal with this year is here to stay. No, I'm not panicking about increasing cost of living. But some of these hikes are devastating, budget smashing. You see your goals slip away right before your eyes. Shits fucked up, any way you look at it.

[@quintessenceSL]

I am reminded of how parking prices went up during a famous trial due to all the press flooding the area. They never went back down after, and it took a good long while for income to equilibriate with the costs (part of your benefits package was subsidized parking).

[@DubCmusicTV]

400 more a month???

[@lauraigla6319]

@@DubCmusicTV yes, it went from $700 to $800 in January. Then, it went from $800 to $1100 recently. This is for 3 days per week. It's made us completely reevaluate our lives.

[@johngalt5166]

You can thank kenzian economics for that

[@Zach______]

Does that mean ETFs like SCHD will fall further than the SPY or Total Stock Market ETFs if stocks do end up dipping?

[@Financial_Revolution]

9:50 on point

[@ihatethis1810]

Ask anyone from Argentina if you'd like advice on how to handle inflation. We've sadly had 2 digit inflation for two decades by now.

[@venictos]

How do the people get by? Barter?

[@MrTmenzo]

Messi will save you

[@byronalexanderlamb]

You literally summed up economics and finance in one video XD - well done - so many concepts under 15 mins!

[@sietsetb1]

Could you do a honest comparison of the eurozone vs the us? ..economic(currency )strength. They say we are better and safer in the eu. This is not true though? Since our interest rates have been lower than the US. For quite some time..

[@eointuohy1078]

Two points: 1: The recent monthly inflation figures are distorted by the base effect and must be compared to pre-crisis levels to get a full picture. Think of it as a rebound back to trend and not as a divergence from the long term trend. 2: Growth in the money base does not always translate into inflation. Inflation is driven by volume and importantly, velocity. Inflation can be best described as too much money chasing a fixed amount of goods. However, the velocity at which money has been spent has been decreasing for decades and dropped sharply during the pandemic. Unless we see a reversal this trend high inflation is unlikely. Think about it like this if J Powell printed $100 trillion tomorrow and just left it in a dormant account, would that push up prices? The answer is no, he would first have to try and spend it.