In today’s episode of the 24/7 finance series analyst Jeremy Phillips and Austin Smith discuss rebounding inflation, and two stocks for investors to look at today. In inflationary times many investors seek out gold, and more recently Bitcoin. But we recommend instead investing in companies with pricing power that can easily pass through and increase in costs to end consumers.

Transcript: 

Hello, everyone.

Welcome to 24-7 Wall Street’s finance series.

We are talking with Austin Smith today.

And a topic a lot of people are asking us about today, Austin, is inflation.

It’s, of course, been on the top of mind for years, and it drives the Fed’s movements, interest rates on mortgages are back up over 6%, 7%.

Some people are even still getting 8%.

And of course, many categories of inflation moving up austin can you uh talk to our viewers um your thoughts on inflation yeah boy the inflation story i mean just just look at uh the current state of pricing you have you have costco selling 200 million dollars of gold per month based on an estimate from wells fargo so gold is back in style bitcoin is hitting all-time highs the price of the forever stamps are rising five cents right now it’s tied for their biggest increase ever mcdonald’s prices are outpacing inflation i just saw a report this morning that insurance premiums have increased 22 percent a year compared to 2021 insurance premiums are up 50 and that’s both for home and auto the most common types of insurance that people carry um and you know what jeremy just to be frank jamie diamond warned us against this warned us about this in his most recent investor letter and he’s right it does not look like inflation is licked yet we wanted to believe we were out of the woods but based on the things i’m seeing out there in the market it just doesn’t seem like we’re there yet inflation is still with us and it looks like it’s going to be with us for foreseeable future.

And Austin, it seems like when people talk about inflation, they talk about gold prices a lot.

And of course, you know, something the last time we had very high inflation like this that didn’t exist is Bitcoin.

Can you talk about the price movements on those two things and how they relate to inflation?

Sure.

Well, out in the marketplace, prices are increasing because inputs are increasing.

So as your input prices go up, your outputs have to increase as well to maintain profitability.

So then that’s on the corporate side, though.

So what’s driving the price of gold and Bitcoin, which is largely driven by retail investors?

As far as we can tell, it’s fear and a desire for price stability.

Simply put, they want something that’s going to, in their opinion, keep pace with inflation.

It’s difficult for them to maybe pick the stocks that are going to do well in this environment or that.

But what would we recommend people do in this environment?

The fear driven investment for gold and Bitcoin today is not where we would recommend investors, but we believe in investing with optimism and productive entities that create value for their customers or users.

So if you want a publicly traded industry that’s somewhat conservative but has the ability to raise pricing because it’s so essential, Look at railroads and trash companies like Waste Management or Republic Services.

They’re a great way to go.

They’re low volatility.

They have pricing power to keep pace with that inflation as you go.

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