With The FED and Central banks printing money and devaluing currencies, many people are concerned that hyper inflation will soon follow. In this video, Adam Khoo argues that the deflationary effect of technology and innovation will hold back inflationary pressures.
He will also present the best assets that can be used to hedge against inflation are compare the relative performance and risks of stocks real estate, gold and Bitcoin
Stock investment & trading insights by Adam Khoo shows you profitable trading and investment opportunities in today’s stock markets.
These are essential strategies for stock traders and investors who want to improve their investment and trading performance.
Adam Khoo is a professional stocks and forex trading and the best-selling author of ‘Winning the Game of Stocks” and “Profit from the Panic”. Thousands of students have profited from his sharp investment insights into the world of stock investing and trading.
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One of the best explanations about inflation as well as deflation 🙂
However, your prediction about inflation didn't hold … we are now at a record high 7% inflation – highest since 1982.
I've stumbled upon your channel recently and have been binging on your contents. Thanks for the video …. keep up the great work!!
in the video, Adam mentioned that the top 1% get the money and didn't spend it. Therefore circulation is poor? My qn is those people (like us) who purchase stocks and properties, when our 'assets' appreciate because of the money in the market that end up buying those assets, does it not mean the money will flow back to people like you and me. Then this is where we get to spend which causes the money velocity to be high? I am not getting the full picture. Can someone enlighten.
The big distinction between the definition/cause of inflation (you are teaching) and the Austrian School of Economics is what you are teaching as inflation is the result of inflation. So much seems to be nominal confusion; when the result is the loss of purchasing power (which is the all important point). Oh; and by the way, one of the all important results of the population being under house arrest is the velocity of money being kept in neutral (or even park).
Perfect prediction Adam
CPI is bogus instrument to measure inflation after Clinton administration removed housing prices from CPI to reduce SS payments (that are based on inflation). So if you factor housing prices into CPI the US could already be in double digits inflation.
What about Real estate for young couples and families, What about food, what about healthcare cost – those are much important than using smart phone or watch videos cheap on Netflix ?
Could you do an updated video on this?
The priests of doom are quiet only just before the apocalypse.
Michael Burry Disagrees with you . He was correct on the housing market and in Game stop stock. I respect both your opinions I guess time will tell ! Is there any situation you see hyper inflation ?
Hi Adam, I understand youre referring to the US CPI and have to point out that this figure is considered highly manipulated by the Fed amongst many traders I know. With daily purchasing, there is no way people in the US are dealing with a measly 2.6% increase y/y inflation, as the CPI would suggest. Regarding M2 velocity, be aware that the Fed is conveniently not reporting that data anymore. I am relying on financial institution earnings now to see spending (JPM, GS, V, AMEX, etc.) – it is rising exponentially and its not debt-based (i.e. not the good kind). The question comes down to when / if the market makers will preemptively smash the markets over inflation, or if they will risk letting the retail trader wake up to it. Long $Vix here.
Great video . I have one comment In 2008 the FED QE was not giving people money in their hands. Now it is kind of different with all the stimmys? Plus all of those moratoriums etc. and people not paying rents what do you think?
Nice Adam but there is one element you didn't factor in when assessing the risk of high inflation: Biden's plan for a global corporate tax rate, which has been now submitted to tax negotiators from 135 countries at the OECD. The proportion of gross profits shifted in the tax havens was around 5-10% back in the 1990's and soared to nearly 25-30% today. This has been something advocated for long by the likes of Thomas Piketty or Paul Stiglitz and there will be wide support for it and we can now see bold actions being taken regarding this.
This explains in part why the M2 Velocity crashed while the money supply increased at the same time over the last 15 years. Even though multinational companies showed record profits year after year, this has not translated into increased purchasing power for the average people, as Governments have been unable to levy taxes appropriately – which would have otherwise translated into more infrastructure spending, hence more jobs, hence more spending, hence more money velocity and inflation. If this goes ahead and we see a substantial minimum global corporate tax rate being agreed, I could see all this money sitting offshore being re-injected in the economy through taxation and a substantial inflation following up. So we need to keep an eye on this.
More inflation coming is pretty much inevitable when you look at how much money has been injected into the economy since the pandemic started. I think what really will trigger higher inflation is once more economies start to really open up again and in turn it becomes possible to spend money outside which should then spike money velocity and thereby increase inflation. You mention the velocity of money as well but only focus on the 1 %. Although it may be right that they are the largest holders of cash the overall money velocity is extremely low because almost nobody can spend cash in the real world due to the lockdown situations. As soon as this ends money velocity will spike and push inflation. Another reason that inflation is on the rise is that the FED and other central banks are actually targeting it with their policy: this is not a secret they openly state exactly this. The recent rise that we have been seeing in US 10 year yields which was also mainly responsible for the short retracement in stock markets we have seen underlines this.
I think its incredibly interesting to see how more and more of the smart money is actually moving out of gold as the classic inflation hedge (fund flows have been declining since last October) and into other new inflation hedges especially in the crypto space (funds flows have been continuously increasing).
I also have to make the argument against stocks being a good inflation hedge. The reason why stocks are currently outperforming is that a big part of the money that is being injected into the economy actually flows into stocks. So the valuation of stocks is not a result of actual value creation but a result of inflation itself. This can work in your favour if you ride the wave up and then exit out of your stocks and put your profits into something that is inflation protected. If you however keep your money in stocks or cash you will get hurt as soon as an inevitable bear market will set in once the tightening starts and the free money ends and all the smart money pulls out of the stock market and takes their profits elsewhere.
agree on most parts but higher inflation is not good for real estate prices as interest rates rise putting pressure on RE NPV. we have seen falling rates the last 40 years leading to the observable rise in real estate prices.
Adam, do you hold bitcoin?