Commentary for week ending 06/12/2021

New inflation data showed a 5% jump in consumer prices on a year-over-year basis in May.  But the market shrugged this report off, perhaps believing the Fed’s line that “inflation is transitory”.  I don’t believe that inflation will be transitory so I am less than sanguine about the short-term prospects of the stocks in the Growth portfolio.  So, I would not add to positions in the growth portfolio at this time, but I would not sell anything either (otherwise known as a “hold” recommendation!).  


As for government actions (or inaction), I am hopeful that there will be an infrastructure bill.  It is clear that America’s infrastructure is in dire need of repair.  For example, 42% of all bridges are at least 50 years old, and 46,154, or 7.5% of the nation’s bridges, are considered structurally deficient, meaning that they are in “poor” condition.  And you all probably know that the rest of the infrastructure like roads, airports, railroads, etc.  are in sad shape as well.   I would add broadband into the mix as well, since the internet is a vital information superhighway.  So, let’s hope that Congress will send a real infrastructure bill (without unrelated “wish list items”) to the President soon. 


As mentioned in earlier posts, I believe that you should protect yourself from inflation by investing in energy, real estate, precious metals, and commodities.  For energy I suggest the oil majors like Exxon Mobil (XOM) and Chevron (CVX) .  For real estate, I suggest you investigate rental properties, or if that is not feasible, consider a real estate investment trust ETF (for example, consider the Invesco Active U.S. Real Estate Fund (PSR)).  For precious metals, there are good ETFs for gold and silver like GLD (or IAU, which has lower expenses) and SLV.  For commodities, consider an ETF like First Trust Alternative Absolute Return Strategy ETF (FAAR).   And I as also mentioned, there are natural resource funds that specialize in water like Invesco Water Resources ETF (PHO).  


As for the income fund, it has performed admirably in the few months since its inception.  I don’t see any reason to make any changes at this time.   But once a stock grows more than 30% in a short period, I suggest doing a little pruning, especially if you have need of a little extra cash. 


So, folks that’s about all for now.  Hope you, your families and friends are all well!  


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