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Tags: supply chain | investments

Beat the Supply Chain Crisis With Smart Investments

a businessman holding a smartphone with stock market symbols surrounding him

Charles Mizrahi By Friday, 22 October 2021 12:52 PM EDT Current | Bio | Archive

President Biden’s recent announcement that he struck a deal with one of the nation’s largest ports to increase output and alleviate our nation’s growing supply chain crisis is nothing more than a headline.

It’s a pebble tossed in a fast-moving river.

Alas, even the positive spin Team Biden hoped to gain from that event was quickly overshadowed by the news that Secretary of Transportation Pete Buttigieg — the government official charged with keeping his eye on this exact ball — has quietly been absent from his office since mid-August.

In true form, the political pundits took to the airwaves to seize on the opportunity to rebuke Biden and his Cabinet. While it’s true that the optics are terrible for Biden there is little this administration, or any administration, could do at this point.

Although it might feel good to criticize the administration, we would be better served by beginning to understand the magnitude of what we are facing and what actions we must take as Americans to prepare.

Rising inflation and global supply chain issues have combined to form a perfect economic storm — it’s going to be difficult and it’s not going away anytime soon.

China’s heavy-handed regulations on energy companies are creating rolling blackouts, shutting down factories, and slowing manufacturing. India, another manufacturing giant, is also facing energy issues.

On top of that, manufacturing countries like India, China, and Vietnam are still dealing with worker shortages due to COVID-19.

Add to that the rising price on everything from raw materials to shipping containers and you have cost increases throughout the global manufacturing/supply chain.

We are now at a place where too much money is chasing too few goods — the very definition of inflation.

It’s no wonder that a recent poll by HarrisX and Banyan Hill Publishing found that 60% of Americans’ mental health is negatively impacted by financial worries, driven in part by the concern that they don’t think their savings and investments will support them in retirement.

This was before Americans started waking up to inflation and product shortages.

The reality is, we are in for short-term pain in our economy and our bank accounts. But the economic storm doesn’t have to hurt Americans' long-term financial future.

Americans are conditioned early in their investment endeavors that every ebb and flow in the market or financial headline spells doom for their portfolio. This causes investors to overreact to every market move, switching their money from one investment to another, hoping to ride out the present storm.

But everyday Americans don’t have to live by the daily wiggles and jiggles of stock prices or live in fear of an economic crisis. There are ways to protect your financial future if you don’t panic and think clearly.

First, understand the threat that inflation poses to your savings accounts. Inflation is a tapeworm, as described by Warren Buffett, it sucks the purchasing power of your dollars.

Your goal should be to get your money into an investment that provides a return that can outpace inflation.

Which leads us to the next step. The stock market.

Invest in stocks that have pricing power. The ones that can raise prices and pass it on to consumers. Companies such as Microsoft, Amazon, and Netflix are just three examples of businesses that can raise prices and consumers will continue to buy their goods or services.

Finally, invest for the long term. Over time, great businesses that are in industries with tailwinds pushing them higher, run by outstanding CEOs, and purchased at attractive prices, will continue to march higher — regardless of the current economic challenges.

Coca-Cola is a great example of this. More than a century ago, in 1919, the company went public at $40 per share. If you would’ve owned just one share, it would now be worth more than $10 million. During that same time, America went through the Great Depression, World War II, stagflation in the ’70s, and the 2008 Financial Crisis. Yet just holding one share of a great company, and not focusing on the short term would have made you wealthy.

The most important part of this approach is knowing that you don’t need to risk your net worth, and have sleepless nights, by taking chances on risky bets on the ups and downs of the daily fluctuations of the stock market.

We’ve been through depressions and recessions before. Great companies, like Coca-Cola, weathered those financial storms, and thrived. They did so by selling a product that consumers wanted, at a price they could afford, and building their brand along the way.

Americans can protect their financial future by imitating, and investing in, those companies that know how to not just survive the coming economic woes — but thrive.

Charles Mizrahi is author of Wall Street Profits for Main Street Investors and host of The Charles Mizrahi Show. Read His Reports — Here.

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President Biden's recent announcement that he struck a deal with one of the nation's largest ports to increase output and alleviate our nation's growing supply chain crisis is nothing more than a headline.
supply chain, investments
Friday, 22 October 2021 12:52 PM
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