The “S” Word – Investing During Stagflation

The financial press is a-buzz with talk about “stagflation.” But you won’t know how to handle the hype unless you know what stagflation really means for you and your portfolio. calls stagflation “a condition of slow economic growth and relatively high unemployment – a time of stagnation – accompanied by a rise in prices, or inflation.”

Right now, we are looking at a possible scenario in which the economy slows dramatically and, as a double whammy, inflation runs higher than normal. The average fixed-income investment won’t keep up with the higher inflation rate, and most stocks will drop in value because of the slower economy.

So how do you invest during a period of stagflation? Very carefully. 

During periods of high inflation, natural-resource investing is one of the best ways to outperform the market. Gold, uranium, silver, and other natural resources tend to move higher. 

Resource investing is not my area of expertise, but my colleague, Dr. Rusty McDougal, is an accomplished natural-resource investor. He writes the Resource Windfall Speculator newsletter, which can help you through a difficult time like this in the market.

[Ed. Note: Rick Pendergraft is a professional trader and market analyst. In Rick’s new investment service, he reveals how you can make hundreds – even thousands – of dollars just by playing a simple game of “guess the pattern.” Learn more here.]

Inspired by his high school economics teacher, Rick Pendergraft fell in love with the markets at an early age. He entered his first investing competition at 17, and opened his first brokerage account before he finished college. At the age of 23, on the third options trade he had ever placed, Rick turned $1,800 into $22,000 in less than a week, when the company he bought became the target of a takeover. He admits it was a stroke of luck, but it was a memorable education as to the leverage that options can provide. After a ten year career in banking, Rick decided to pursue trading full-time. To get his foot in the door, he started out in the sales department at Schaeffer's Investment Research. It was not long before his talent was recognized and he was invited to apprentice under Bernie Schaeffer, one of the top options traders in the world. Rick thrived in his new position and twice received the award for "Top Trader."Rick has developed a loyal following of readers who are grateful for his timely warnings and profitable advice. He is widely recognized as a market expert and has been frequently quoted by Reuters, BusinessWeek, Forbes, USA Today, the New York Times, and the Washington Post. Rick's primary focus is on identifying short and intermediate term rising and falling trends in the major market sectors. His analysis is based on technical factors along with indicators of market sentimentRick lives near Delray Beach, FL with his wife and three children.