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Is Your Portfolio Hedged Against Inflation?
This year, for the first time in 30 years, you have lost money on your equity side and on your fixed income. When inflation is rising, two things happen. Long-term interest rates go higher. That hurts equity because the discount factor for equity becomes higher. And growth stocks and tax stocks that are long duration hurt even moreBecause they're long duration assets and more sensitive to interest rates. If you went into cash, you lost because of inflation. What's the solution? You have to go into assets that are hedge against inflation. One of them is tips which reprised when inflation is higher. The second one is very short duration treasuries Because as interest rates going higher,