How to Hedge Against Inflation
The year-over-year U.S. inflation rate came in today at nearly 5%, the fastest pace of higher prices since 2008. Some context is necessary around this number. A year ago the economy was still slowly waking up from its pandemic slumber.
Beyond keeping your lifestyle inflation under control and increasing your pay, the best way to hedge against rising prices is to stay invested in the stock market. That’s not the sexy inflation hedge most people are looking for but it’s probably the easiest answer.
Take a look at some admittedly cherry-picked time frames for annual returns on the U.S. stock market (S&P 500):