Nick Hodge,
Publisher
June 21, 2021
Editor’s Note: Below is the intro to the June issue of Foundational Profits, which premium members received two weeks ago. We’ve been long oil stocks in that publication for the past six months. Certainly before you heard anyone talk about inflation or high gas prices. I explain that profitable process and how I view the market in this short segment.
Enjoy,
— Nick
Last month, amid a selloff in the stock market (S&P 500), I told you that the bull market would continue and laid out some reasons why:
Volatility (VIX) was still below previous selloffs and didn’t look like it was breaking out.
Corporate earnings were strong
And bond yields, though they had paused a bit, would continue to rise (inflate)
Bond yields rising means bond prices are falling. And when money comes out of bonds… it goes into other asset classes… like currencies, equities, and commodities.
When that money flows into other assets — like gold and stocks and copper and cryptos — it inflates their prices.
And that’s where we are now, with record prices in many assets.
How can it be that we saw record stock prices for years as bond prices were strong and yields low… without those record prices manifesting in commodities until now?
For that, you have to ask the man behind the curtain to whom you’re supposed to pay no attention.
My guess would be that inflation spilling over into cryptos and shitcoins and real estate and commodities is another domino to fall on the road to the wizard being revealed.
Owning the things that are inflating fastest is the key to winning this game.
So far this year that has been energy, financials, real estate, and materials.
Those are all sectors of the S&P. But through that lense, it isn’t hard to see why:
- You’re paying more at the pump
- The housing market is crazy
- Cryptos (which are both commodities and financial-related) are going nuts
- And commodities (materials) like copper are hitting records.
My and your “portfolio” is alive. It’s not just stocks. It sure as hell isn’t just cryptos.
It’s my house and acreage. It’s my businesses. It’s my life insurance. It’s my private placements. It’s the accounts I manage on my own. It’s my managed account. It’s the annuity I set up for my parents. It’s the college funds for my kids. And it’s the trust that protects it all from familial and governmental tomfoolery.
The market — currency, bond, and commodity prices — affects all of that and the decision-making process that goes into it.
That’s why it’s hard for me to say you should have xx% of your portfolio in this or that asset class or sector or stock.
But it’s also why I love “the market”.
Because I can tell you to buy energy stocks because oil is inflating six months before you have to force small talk with your friends about high gas prices.
Bring ‘em on, baby! I’ll pay them with my Exxon dividends.
Being plugged into this every single day is also why I can tune out a lot of the noise and call bullshit on contrived government and media narratives like “transitory inflation”.
I don’t even have to entertain the concept, because I’m too busy harnessing real and present inflation in my account.
See how we’re profiting from energy stocks here.
Call it like you see it,
Nick Hodge
Editor, Daily Profit Cycle
Nick Hodge is the co-owner and publisher of Daily Profit Cycle and Resource Stock Digest. He's also the founder of Hodge Family Office, the umbrella organization for his three premium services: Foundational Profits, Family Office Advantage, and Hodge Family Office . He specializes in private placements and speculations in early stage ventures, and has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world.
*Follow Nick on Twitter.
[leadgenform slug="dpc_dpc-story_top-sectors-2021"]