Even WMT is fucking me today.
American are starting to realize that inflation is going to increase over the next 12 months. And even over the next 4 years. I was cool with 6% inflation when I was making 30% returns on investments. Now im starting to get concerned that I will have to look for alternative investment ideas. Lower inflation when ?
I got concerned a couple months back about valuation with the S&P trading close to 24 times forward estimates when the index hits 6100. It was able to do that a few times but has trouble holding or advancing beyond that level. I changed my allocation to only 30% stocks.
I know inflation is always a concern, and it has been ticking up lately but I don’t think that’s much of a problem as valuation right now to derail this Bull market. Look how much the market appreciated when inflation was running really high.
High yield bonds kind of look attractive right now and you can earn close to 7% , less vulnerable to interest rate risk than investment grade, and you don’t have to be that concerned with duration. Tariffs will have a much less impact on high yield because most of these companies issuing the bonds do business within the US. Not a bad place to park right now, so my boring portfolio is 30% equites, 25% high yield , 45% money market Vanguard federal.
It sure is looking like a 20% bear decline in the coming quarters but I’m probably wrong as usual.