Ben Hunt — highly respected fund manager, author, and former professor/entrepreneur/venture capitalist — says that to be successful in managing your wealth, there’s only one question that matters:
Are we entering a deflationary future, or an inflationary one?
The strategies and appropriate investment targets for each are extremely different, so you’d better answer correctly.
Though Hunt says as long as you identify the trend “roughly” right, you should do fine. You don’t have to be brilliant with the exact investments you put your capital into. As long as they benefit from the secular trend, its massive scale and momentum will do the heavy lifting.
So which kind of future are we entering?
Hunt thinks we’re at a very important inflection point. That after decades of deflation (e.g., chronically declining interest rates), we’re now transitioning into an era of secular inflation.
The $trillions in monetary and fiscal stimulus so far, and the near-certainty of much more to come, are certainly a big step in that direction.
And with asset prices completely distorted from reality, a struggling global economy, and an inflationary outlook, Hunt thinks the coming years will be extremely rocky for investors. Lots of cross-currents, with the only guarantee being that the majority of investment predicts will be foiled — as there remain very few active investors alive who have any experience managing capital in an inflationary environment.
Which is why Hunt is emphatic that now, more than ever, is the time to partner with a financial advisor who understands the risks in play, can craft an appropriate portfolio strategy for you given your needs, and apply sound risk management protection where appropriate:
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