By Kris Sayce, editor, Casey Daily Dispatch
No need to worry.
You can breathe a sigh of relief.
Treasury Secretary, Janet Yellen, says everything is under control!
Sure, price inflation is 6.2% over the past year.
But that won’t last… says Yellen.
In fact, she says, “The Federal Reserve wouldn’t permit that to happen.”
But if the Fed had that power… and really wanted to use it…
Why has it permitted the current high inflation?
The truth is, whatever the Fed’s power and ability… and whatever Janet Yellen promises… inflation is here now… and it will be here for the near future.
That’s why investors have to prepare now as inflation continues to take hold.
Here’s how we suggest you play it…
If this is your first time reading the Dispatch, welcome. If you’ve been here before, welcome back.
At the Dispatch we have two goals:
To introduce you to the most important investing themes of the day, and
To show you how to profit from them.
We do this by showcasing ideas from our cast of in-house investing experts, Dave Forest and John Pangere. And from the founder of our business, Doug Casey.
Today, we continue to look at this year’s biggest story – inflation – and how investors can build a portfolio to beat it. We’ll show you how below…
Three Weeks and a 321% Gain Later
Traditionally, when investors think about inflation, and how to protect their wealth against it, they think about gold.
Now, gold is a fine investment. Casey Research has championed it for over 40 years, calling it real money.
From the boom in the 1970s to the peak in the early 1980s… to the slump that ended at the “Brown Bottom” in 2002 (when U.K. Chancellor of the Exchequer, Gordon Brown, sold half the U.K.’s gold reserves)… through the peaks in 2011 and again this year.
But as much as we like gold, it’s not the only inflation-busting investment. Besides, gold has its downsides, too. You have to store it somewhere, and it doesn’t generate any cashflow.
Real estate is another proven inflation buster. And it has a big benefit over gold – it can generate cash flows from rental income.
The downside is that it has a high barrier to entry (meaning high start-up costs). And there are maintenance costs.
That’s where assets such as stocks, warrants, and even cryptos are a great alternative.
It’s the ease and almost instant liquidity that make stocks, warrants, and cryptos ideal investments.
How “liquid” an investment is means how easily and quickly you can convert the asset into cash. Stocks, warrants, and cryptos are very liquid. Cryptos can settle for cash right away. Stocks and warrants settle for cash in just two days.
If one sector or stock looks better than another, you can sell one and buy the other without much effort.
By contrast, if you want to change your property portfolio, it’s not easy.
Plus, one of the best things about stocks, warrants, and cryptos is that you can play for quick gains… take money off the table… and then compound that into another investment.
In fact, subscribers to Dave Forest’s Strategic Trader advisory service had the chance to do that yesterday. That’s when he told his subscribers to lock in a 321% gain on a warrant he recommended just three weeks ago… (paid-up subscribers can catch up here).
A Better Way to Play the EV Trend
The mistake many investors make when they try to beat inflation is thinking they have to invest in a single asset or a single idea for the duration of that inflationary period.
That’s why many investors buy gold. They think the right thing to do is to buy it and hold on… forever.
You don’t know when that period will begin and end. If you buy an asset for the long term today, based on high inflation, what happens if it ends sooner than you expect, but you’ve committed for the long term?
Or what if you buy a long-term asset, and then realize you’ve bought the wrong one? We’ve all done that with stocks… but it’s easy to correct. Try doing that with real estate or some other “clunky” asset.
By contrast, Dave has a much better inflation-busting approach. He recommends investors make a series of small bets in high- and fast-growth assets.
On October 21, Dave told his subscribers to buy into an asset to benefit from the infrastructure bill and the trend towards clean energy and EVs (electric vehicles).
And no, that stock wasn’t Tesla (TSLA). Now sure, if he had told his subscribers to buy Tesla then (October 21), and sell yesterday, that would have been a neat 19% gain. Pretty good for three weeks.
But Dave had a better idea. He told them to buy the warrants of a stock involved in building EV fast-charging sites.
Buying that stock would have more than doubled your money in three weeks.
But buying the warrant (we won’t reveal the name, as it’s still an active recommendation) and then selling yesterday, resulted in a 321% gain.
Here’s the best part. And this is where the compounding comes in. When a stock or a warrant moves this fast, Dave rarely suggests completely cashing in.
Instead, Dave issues what we call a “Casey Free Ride.” That means taking your initial stake (or maybe a little more) off the table and reallocating that cash elsewhere.
We Love This Kind of Trade
It’s a great way to take profits… while keeping some cash in the original investment… but also allowing you to take a stake in another exciting opportunity.
Plus, it means you can’t lose, no matter how the company does in the future.
It’s a three-for-one trade. We love that kind of trade.
In this case, aside from taking a part-profit on one EV trade, this week Dave recommended another warrant that’s also in the EV market. If all goes to plan, it, too, is set to benefit from the green energy trend.
That warrant is already up 5.1% as of yesterday’s close.
The bottom line is that when it comes to beating inflation and growing your wealth, it doesn’t mean buying one asset and hoping it will perform well over two, three, or five years.
Take small positions, and aim for big gains. When it works, cash out on part of your position (or all of it), and then compound those gains into other fast-moving investments.
Of course, you won’t win every time. Investing means taking losers as well. But that’s the great thing about stocks, warrants, and cryptos. Getting out is pretty quick and easy.
In our view, whatever Janet Yellen thinks about inflation… and whatever she thinks the Fed can do about it… our bet is that inflation is here to stay.
That means investing in a way that takes that into account. If you’re looking for a way to play it, we say that following Dave’s short-term approach is the best way to succeed.
Editor, Casey Daily Dispatch
P.S. Warrants are a great profit tool in all markets… but you have to know what you’re doing. There are plenty of duds out there.
Fortunately, Dave and his team have figured out the formula for success. (Another of his open warrant recommendations is up 2,043% at writing.)
You can easily get in on these inflation busting picks. Just go right here.