Invest in Pricing Power ๐Ÿ’ช

Yesterday, the Bureau of Labor Statistics (BLS) released the hotter than expected 8.6% year-over-year consumer price increase for May 2022. Many of our political leaders and market commentators were expecting a much lower level and were claiming for months that consumer price inflation had peaked. ๐Ÿ“ˆ
Inflation has not peaked. In fact, it’s just getting started. ๐Ÿ”ฅ
There is a lot more downside risk in the general stock market. Owning stock market index funds is a good long-term strategy for building wealth. However, in recent years, many of the more conservative indices (like the S&P 500) are dominated by technology stocks that are too expensive based on their fundamentals. This affects these broad-based index funds and makes them less attractive investments right now. You can build wealth investing in them, but your progress will be slower. ๐ŸŒ
You want to own stocks that are profitable businesses, that provide valuable goods and services, and that have pricing power.
A company like Consolidated Edison (ED) provides electric power to customers in New York State. If we go into a recession, consumers may skip their latest I-Phone purchases or restaurant meals. However, they are unlikely to cut back on electric power consumption at home. ED has increased its earnings and dividends consistently over the past 50 years. This is a company that has proven it can grow in recessions. ๐Ÿ’ต๐Ÿ’ฐ
This is also an example. I’m not recommending you buy ED, and I don’t recommend buying individual stocks unless you are a professional investor. ๐Ÿ‘ฉโ€๐Ÿ’ผ๐Ÿ‘จโ€๐Ÿ’ผ
However, you should look to invest in a portfolio of businesses or exchange traded funds (ETFs) that provide goods and services that are needed all the time. Talk to your financial adviser about your options. You don’t want to invest in all the speculative meme stocks, technology stocks, cryptocurrencies, non-fungible tokens, and other derivatives trading on Wall Street that don’t actually provide value. These are speculative in nature, and while you can make money with them, the long-term trend for them is down. You want to put your savings in a broad-based portfolio of investments that will thrive in the inflation storm and get you to your financial goals. โ˜€๏ธ
Have a great weekend, and I’ll talk to you again soon!

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