Minuk’s Musings (weekly note) and the Inflation Fighter

Richard Minuk - Dec 02, 2022

What is the best asset class to hedge against inflation? Is it Gold? Infrastructure? Real Estate? This week I received a chart with data that may surprise you.

What is the best asset class to hedge against inflation?

Is it Gold? Infrastructure? Real Estate?

This week I received a chart with data that may surprise you.

Let’s think about it - when inflation hits an economy, prices rise. Put another way, companies charge more for their products and services.

Tell me about it, I just paid $12 for some hummus! 

The ability to pass through the cost of inflation to consumers has meant that historically, over the long-term, the best thing to do combat inflation has been to be an owner of good businesses. In other words, to own equities.

The chart below shows how often different asset classes have outperformed inflation. Past performance does not guarantee future results.

Line graph of Percent of time and asset class outperforms inflation over a given time horizon (since 1953)

This week’s "Focus" from our economics team is here - Still Recession Bound? (bmo.com)