Lassoing the Economy
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The economy is reopening, and it’s going as smoothly as our readjustments to office life and non-elasticated pants – so, not great. Supply chains are a mess and seaports are severely congested, causing long waits for goods like cars, furniture, and even the color blue. There’s a labor shortage across the country as workers reevaluate their options and quit or go on strike. The housing market is still too hot for many buyers due to low inventory.
These are some of the reasons why last month consumer prices jumped the most since January 1991 — and investors are not convinced it’s a temporary blip. The prospect of persistent inflation makes the stock market jittery because it lowers the buying power of returns and pushes the Fed to make borrowing more expensive for businesses.
Experts suggest that if you have money invested, it’s a good idea to protect your portfolio by diversifying to include some inflation-fighting assets. This chart from Wells Fargo illustrates how different asset classes reacted to periods of rising inflation in the past. As a consumer, you’re probably feeling the pinch already, especially at the gas station where the average price per gallon is at its highest point since 2014.
This brings us to a major contributor to inflation right now – a global energy crunch. The cost of oil, natural gas, and coal is skyrocketing everywhere. Since the first reports of shocking electricity bills in Europe back in August, China and India have faced power cuts for a lack of coal and British petrol stations have run dry.
Here in the US, President Biden has sought an increase in oil production while simultaneously seeking greater emissions cuts in negotiations with Capitol Hill as he heads to COP26 in Glasgow.
What are natural asset companies?
Your house plants may be constantly dying, but wouldn’t it be cool if you could keep a forest alive? What if you could invest in a piece of nature and its goodness? Soon you may be able to.
The New York Stock Exchange (NYSE) and Intrinsic Exchange Group (IEG) are developing a new class of publicly-traded assets called Natural Asset Companies, or NACs. Investors buying these “natural equities” will hold rights to the benefits a piece of land offers, which are known as “ecosystem services.”