Who benefits from inflation?

[cribmogul]

Updating this thread:

As previously mentioned I think NSR will be a good buy BUT a caveat is it to buy it at a suitable price not indiscrimanently. With patience. The momentum of inflation will probably drop the prices of nearly all stocks - even good ones. After that the few winners should start separating themselves. And later after that it's probably time to look at deep value bargains.

*NSR is not currently cheap enough IMO.
**BTFD and swing trading is going well as volatility has started to pickup.

Anyone have other ideas of what specific trades or ideas should benefit from increasing inflation?

 

[divs4ever]

*NSR is not currently cheap enough IMO.

that has been my opinion of NSR as well ( but still worth watching )

PLEASE NOTE , this isn't the usual inflation we get , you have supply chain breakages ( not that unusual , for inflation ) BUT also insanely easy credit ( SO FAR ) , so the system is awash with debt , more bubbles than a crate of champagne ( cryptos , real estate , share market , even used cars , and probably a dozen other things , i haven't thought of )

now IF there was a crisis coming ( and lordy they have been kicking the can down the road for years ) , the standard things are FOOD ( COL , WOW , MTS , and actual food producers ) WATER ( D2O , not very exciting but CCL was taken-over ) and SHELTER ( but property is in a bubble , and credit MIGHT tighten ) so which way do you bet ( governments will build more cheap housing MAYBE TWD and FWD will get a break there , and MAYBE ACU will get more surveying work , but these IMO are all poor value , currently ) or the government will let the dice lay where they fall ( more people living in their cars/caravans/tents etc ) ( so SUL , KMD , APE , PWR MIGHT get a boost )

another option might be BSL ( folks building sheds and then living in them )

now death is always an option , i hold PFP but many prefer IVC

both CCV and CCP ( are currently over-priced in my opinion )

other 'weirdo' plays , might include ART ( folks looking for any work or worker they can ) CV1 and XF1 ( you have so many regulations hiring new staff )

now traditionally the West has found a BIG war to distract the world from all this hardship so don't ignore ASB and BIS ( and maybe DOW ) if you think they will try this again

DYOR

run the numbers over MTS first ( a bit of food retail , a bit of hardware ) and see if you like it ( memo to self also , i should have been watching it today )

 

[divs4ever]

Goodman to benefit from flight to defensive assets: Macquarie​

Goodman to benefit from flight to defensive assets: Macquarie

Current macro environment is expected to provide strong defensive tailwinds for Goodman Group

www.marketindex.com.au

DYOR

i hold MQG ( 'free-carried' ) but not GMG

 

[qldfrog]

who benefits from inflation?
The governments:
hidden tax increases, bracket creep and GST boost;
the other winner: fixed rate borrower: surprise Government again, and in a few other places, the house mortgagees..but not in Australia.
and people with stocks(warehouse stockpiles)..but stocks have long been gone
So in short, most are losers but not governments until people react and throw them out..
well that was the way it used to work but now, democracy is dead and people have lost power, FFS, people are stupidly and diligently recording their "I am here" QCode at every shop or mall/cafe/restaurant in Queensland with no official purpose even pretended

 

[divs4ever]

“The most terrifying words in the English language are: I'm from the government and I'm here to help.”​

― Ronald Reagan

fact-check = TRUE

if you doubt me , enjoy the next 5 years of your life ( that is your government helping you )

 

[cribmogul]

Great ideas ?
Im going to look at those

A company that sources its own materials, makes something with that, sets its own prices and doesn't have supply chain issues is in a good position to benefit.

 

[sptrawler]

Great ideas ?
Im going to look at those

A company that sources its own materials, makes something with that, sets its own prices and doesn't have supply chain issues is in a good position to benefit.

Or sells something that people or companies have to buy.

 

[Macquack]

One word: BANKS



hahhahah

I would like to throw in Real Estate Agents who make a killing on inflated property prices.

Also, tax accountants whose bills seem to be automatically indexed to the CPI.

 

[cribmogul]

Ita vero

prices are rising, we have lift-off

great work all following this thread were ahead of the curve.

oil price $ spike pushing inflation momentum and providing benefits for those long oil and many other commodities. Stocks dropping but hopefully to rise eventually again with some value

Im continuing to buy aus200 indice cfds at Boll Band daily minimums - successfully continues. Also adapting to the falling market selling at daily MAverage has been successful

What else is everyone winning on?

 

[cribmogul]

Adding another industry to this list that will likely benefit:

Commodity miners, producers, sellers.
BHP is first that comes to mind among others

 

[Value Collector]

Adding another industry to this list that will likely benefit:

Commodity miners, producers, sellers.
BHP is first that comes to mind among others

I would say commodity producers don’t benefit so much as their position is neutral to inflation.

Eg. The prices they sell their commodities for should track higher with inflation over time, but so will their costs, when those inflation adjusted profits flow in it will cause a capital gain, which in turn will be taxed.

So the biggest winner is the government, everyone is is hurt or neutral except for some rare cases.

 

[sptrawler]

From memory the banks do o.k with inflation, as interest rates go up, the margin they get on the loan increases, some people lock in their home loans but that usually means a bigger margin to start with.
Well that's my understanding.

 

[Value Collector]

From memory the banks do o.k with inflation, as interest rates go up, the margin they get on the loan increases, some people lock in their home loans but that usually means a bigger margin to start with.
Well that's my understanding.

Yep, but they also have alot of their own capital being eroded, I haven’t ever done the math though to figure out exactly what their net position is.

 

[sptrawler]

Yep, but they also have alot of their own capital being eroded, I haven’t ever done the math though to figure out exactly what their net position is.

If there capital is out on loan and the rate of return(interest) is increasing with inflation, it would be some kind of hedge, as opposed to those who borrowed the money to purchase depreciating assets, the price they end up paying increases as the value of the object decreases.

Also they borrow money from the RBA for 0.1 % say and lend it at 3%, as inflation increases, the RBA lending rate goes up so does the rate the banks on lend the money at.
But at the same time the money they borrowed of the RBA at 0.1% doesn't change as far as I know, only new funds they borrow, therefore the rate of return on the original loan money keeps increasing. This in turn increases their profits and increases the tax they pay.
The rate they lend savers money at, is the difference between savings interest and loan interest.
Well that is my understanding, that is how the banks get so big, someone will correct me if I'm wrong.

Box: The Term Funding Facility​

The Reserve Bank announced the Term Funding Facility (TFF) in March 2020 along with several other monetary policy measures designed to help lower funding costs in the Australian banking system.

The TFF made a large amount of funding available to banks at a very low interest rate for three years. Funding from the TFF was much cheaper for banks than other funding sources available at the time it was announced, and that remains true today. (See announcement of Term Funding Facility and the Governor's speech Responding to the Economic and Financial Impact of COVID-19).

The TFF is designed to lower banks' funding costs and in turn to reduce lending rates for borrowers. The TFF also creates an incentive for banks to lend to businesses (particularly small and medium-sized businesses). This is because banks can borrow extra funding under the TFF if they increase their lending to businesses: for every dollar of extra lending to small- or medium-sized businesses, banks can access five dollars of extra funding under the TFF (for large businesses, the amount is one dollar of extra funding).

 

[cribmogul]

Hows everyone's positions? hopefully in place or close to now, watching inflation, adding as needed...

I've been selling the German Dax lately with success. The macro picture in that region is uncertain, with stocks liking certainty there's been opportunity to profit. There still may be more opportunity..

Inflation continues higher, it often feeds on itself.

Anyone else had some winners?

 

[mullokintyre]

From memory the banks do o.k with inflation, as interest rates go up, the margin they get on the loan increases, some people lock in their home loans but that usually means a bigger margin to start with.
Well that's my understanding.

Banks do ok no matter what happens.
He who sets the rules reaps the benefits.
Mick

 

[cribmogul]

Seems like a few of the American energy companies (and their shareholders) such as Chevron and Exxon Mobil could keep benefitting in the short term from higher commodity prices. Hard to know exactly how long they could because demand can decrease as new technologies and efficiencies develop as prices push higher. However politicians pushing climate change reform may cause some future under investment in new capacity by these energy companies. Excess capital makes its way somewhere, and this may be to company shareholders through good capital gains and dividends.

There could be some investment opportunities for short term traders...

 

[cribmogul]

Seems like a few of the American energy companies (and their shareholders) such as Chevron and Exxon Mobil could keep benefitting in the short term from higher commodity prices. Hard to know exactly how long they could because demand can decrease as new technologies and efficiencies develop as prices push higher. However politicians pushing climate change reform may cause some future under investment in new capacity by these energy companies. Excess capital makes its way somewhere, and this may be to company shareholders through good capital gains and dividends.

There could be some investment opportunities for short term traders...

Ampol looks to be going well in Aus

 

[divs4ever]

inflation usually brings higher costs , so keep an eye out for margin-squeezing especially for wholesalers ( and importers ) and retailers who will try to absorb SOME rises to attract extra sales

 

[divs4ever]

now NORMALLY insurers are thought to go well on the logic of better ( interest-rate securities ) returns BUT is this out-weighed this time by multiple fragile economies