another post on inflation fears

[merluzzo]

So, many clever individuals believe that there is a substantial risk that the combination of quantitative easing and fiscal stimulus will result in sustained (hyper)inflation and that the central banks will be slow to react as they don't mind inflating government debt away.

So, as an investor what are the possible practical strategies to protect one's wealth? These are the options I am considering and I would be grateful for comments.

1. VHYL as a "value proxy". This is a Vanguard ETF that includes high-dividend shares world-wide. The shares are weighted by capitalisation and include "large and mid-sized company stocks, excluding real estate trusts, in developed and emerging markets that pay dividends that are generally higher than average." These shares are supposed to do better in inflationary environments than growth ones. https://www.vanguardinvestor.co.uk/inve ... tributions.

2. REITs. Central banks can't print property and this should provide a hedge against inflation.I know very little about REITs, but iShares do ETFs that give broad exposure to UK REITS (at a cost, I am sure).

3. FTSE 100 index trackers. Broad exposure to commodity-linked businesses and value stocks. Arguably less overvalued than other markets.

4. VERX, a Vanguard developed Europe ex-UK etf. Again, an attempt to gain exposure to value stocks in markets not as overvalued as the US one.

5. Asia/Pacific/emerging market ETFs. These economies *may* adopt less expansive monetary policies and therefore preserve business value better than western ones.

What do you think?

[NotSure]

I have gone through a similar thought process and come to similar conclusions, FWLIT.

VHYL has just chugged along while growth stocks have flown, but has a weighted P/E of well under 20 (under 17 last I looked). Similar for FTSE100, and some UK invested funds/ETFs are a pick more picky than the FTSE - that is, are lighter on some of the 'dinosaurs' and also contain mid/small caps.

Next in old fashioned value terms comes emerging markets (P/E around 18), followed by Asia Pacific ex. Japan (20), then Europe (20) and Japan (22). All values are approximate and based mainly on Vanguard trackers.

I'm not looking for stellar growth coupled with high risk - I still have a few years ahead of me, but maybe not enough to weather a full-blown 'reversion to mean plus overshoot' in indices like S&P, yet alone Nasdaq.

But I don't want to be in cash/bonds beyond say 30%. As such, I look forward to replies from more experienced and knowledgeable board members on whether investing in 'value' gives a bit of protection from things like high inflation, at the cost of missing out on rampant growth as seen recently in growth stocks, bearing in mind that some will be in (so-called) global trackers with plenty of exposure to growth stocks.

I recently read an amusing article that posited, with bond yields so low already, that the best hedge against a stock correction due to inflation would actually be to short bonds!

[1nvest]

Conventional Gilts will tend to see prices rise as interest rates/inflation decline, decline as interest rates/inflation rise.

Index Linked Gilts do similar, but in reflection of real yields (nominal yield minus inflation).

If the BoE applies yield curve control, prints money to buy gilts and thereby increase demand/push prices up/keep yields down, then there's the potential for real yields to move sharply negative. In the mid 1970's for example real yields were -12% or more at times. Under such situation long dated index linked gilt prices could rise substantially. In reflection of that potential insurance however present returns are of the order -2.5%/year cost.

Gold is somewhat like a index linked gilt, but perpetual and zero coupon. If real yields moved substantially higher (high inflation, low conventional bond yields) then gold likely would see prices rise substantially. But again in the opposite direction, a move to positive real yields, then investors would flight from gold and into the alternative positive real yield choices.

A Permanent Portfolio (Harry Browne's), holds 25% in each of stocks, long term gilt (LTG 20 year), short term gilt (STG 1 year) and gold. Instead of a STG/LTG barbell that combines to be like a 10 year central bullet, you might revise the duration up/down in reflection of high/low interest rates. Perhaps if above 6% interest rates target holding 15 year bullet, or if below 4% hold 5 year bullet, otherwise hold 10 year. On that basis you'd hold 25% stock, 25% gold, 50% in 5 year gilt at current valuation levels.

Yet another valuation based measure is to use the Dow/Gold ratio https://www.macrotrends.net/1378/dow-to ... ical-chart If below 10 then gold is relatively expensive/stocks cheap, if above 15 then gold is relatively cheap/stocks expensive. In 1980 for instance it took a little over 1 ounce of gold to buy the Dow, at other times its taken 40 ounces to buy the Dow (1999 stock peak). Recently its up at around 17 levels, so perhaps stocks are moderately expensive/gold relatively inexpensive.

The Permanent Portfolio caters for 15/35 bands, i.e. 25% target weights, that can rise to being 35% or decline to being 15% before you rebalance back to 25% equal weightings. You might use those levels as the amount to adjust target weights to in accordance with the Dow/Gold ratio, so in the above, with a 10/15 Dow/Gold lower/upper levels and in seeing the Dow/Gold ratio at 17 you'd overweight gold, underweight stock ... 15% stock, 35% gold ... and from earlier combine that with 50% in 5 year Gilts.

For me that offers a better cost/benefit than looking to hold index linked gilts instead.

At a 5 year target maturity you might utilise high street bank fixed rate bonds, which at present when using moneysupermarket https://www.moneysupermarket.com/saving ... ate-bonds/ indicates rates of 0.832% i.e. 0.56% from a 1 year, 0.71% from a two year ...etc.

1 0.56
2 0.71
3 0.89
4 0.95
5 1.05

0.832 average

50% loaded into that and yes, ouch! However if in a years time inflation has raged then likely stock and bond prices might have declined, potentially a lot, and you'd have 10% of your total portfolio value maturing, not having lost anything, gained 0.56% which in relative terms might be like being 100% up relative to stocks that had halved.

If inflation had raged and interest rates been kept low, then gold would tend to have soared in price.

Such a relative valuation PP has the tendency to cater for a 3% PWR, similar to SWR but where the end date value sees at least inflation adjusted wealth having been preserved after withdrawing 3% of the portfolio value in the first year, and then uplifting that amount by inflation as the amounts drawn in subsequent years. In the average case the portfolio tends to grow by around 2% real in addition to that, the 3% figure is the lower end (0% real in addition to that worst case). Without the brain (relative valuation based adjustments (Dow/gold ratio and interest rate based measures/model)) the PP tends to broadly yield around 1% less (2% PWR + 2% real average case).

The PP has the advantage of lowering earlier years sequence of returns risk and has tended to be relatively consistent across periods of both economic expansion and contraction, including over such periods of the very high rise of inflation across the 1970's/80's. A Japanese based PP has also performed well since the 1970's.

Whilst the conventional PP has lagged stock/bond heavy alternatives since the 1980's (when interest rates have declined from very high to very low levels that has favoured stocks and bonds), the rewards were still modest. Relative valuation based PP reduced that lag i.e. would have been more into stocks and bonds for much of that time rather than gold and cash (35% stock, 50% 15 year gilt, 15% gold). Maybe looking like this https://tinyurl.com/28fc56ch from the mid 1980's and up to the 2009 financial crisis (6.5% annualised real instead of 7% for all-stock).

The relative value of gold can also be used as a means to value other assets, such as House/Gold price ratio. https://www.bullionbypost.co.uk/index/g ... ate-ratio/

Really the PP is akin to being a 50/50 equity/bond like portfolio as the very long dated treasury/gilts it holds are comparable to stocks. If as you're holding bonds to maturity you don't mark to market and simply just measure the actual interest/income then it has a lower volatility than 50/50 stock/bonds but similar reward expectancy, which nets a better Sharpe Ratio (better risk adjusted reward). Whilst also incorporating better insurance against the likes of hyperinflation/high-inflation type events (gold). Broadly over full cycles it can all wash https://tinyurl.com/2nxffp7p and end up at comparable rewards (but a tendency for the PP to have the better Sharpe ratio). Within that however at times one or the other leads/lags. Relative valuation/adding a brain can help to reduce the lag risk.

[TUK020]

So, many clever individuals believe that there is a substantial risk that the combination of quantitative easing and fiscal stimulus will result in sustained (hyper)inflation and that the central banks will be slow to react as they don't mind inflating government debt away.

So, as an investor what are the possible practical strategies to protect one's wealth? These are the options I am considering and I would be grateful for comments.

1. VHYL as a "value proxy". This is a Vanguard ETF that includes high-dividend shares world-wide. The shares are weighted by capitalisation and include "large and mid-sized company stocks, excluding real estate trusts, in developed and emerging markets that pay dividends that are generally higher than average." These shares are supposed to do better in inflationary environments than growth ones. https://www.vanguardinvestor.co.uk/inve ... tributions.

2. REITs. Central banks can't print property and this should provide a hedge against inflation.I know very little about REITs, but iShares do ETFs that give broad exposure to UK REITS (at a cost, I am sure).

3. FTSE 100 index trackers. Broad exposure to commodity-linked businesses and value stocks. Arguably less overvalued than other markets.

4. VERX, a Vanguard developed Europe ex-UK etf. Again, an attempt to gain exposure to value stocks in markets not as overvalued as the US one.

5. Asia/Pacific/emerging market ETFs. These economies *may* adopt less expansive monetary policies and therefore preserve business value better than western ones.

What do you think?

Struggling with the same questions.

Big chunk of my portfolio is in high yield FTSE companies, so not shifting this.

I am wary about property. Most REITs are focused on commercial property. I think lockdown/remote working has accelerated a seismic shift in working/commuting patterns this will reverberate in demand for office space. I unloaded my stake in Land Securities some months ago after reading an interview with CEO of BP where he said they were doing a fundamental rethink of their office space requirements. I think this section of the market is going to underperform for a long time. Still in SEGRO, which is focused on warehousing and customers like Amazon.

Have a small (~5%) portion of my portfolio is in Gold ETF, thinking of topping this up.

Also starting to build the % held in cash. Counterintuitive, but this is a good place to be as inflation gets started - market will reprice bonds and stocks.

[UncleEbenezer]

I am wary about property. Most REITs are focused on commercial property. I think lockdown/remote working has accelerated a seismic shift in working/commuting patterns this will reverberate in demand for office space. I unloaded my stake in Land Securities some months ago after reading an interview with CEO of BP where he said they were doing a fundamental rethink of their office space requirements. I think this section of the market is going to underperform for a long time. Still in SEGRO, which is focused on warehousing and customers like Amazon.

Nature isn't the only thing to abhor a vacuum. Other uses are being found for office space. Just as barns have been converted to houses or warehouses to flats. But REITS could well suffer on the way there, especially for income investors.

Residential property is more of a joker in the pack. For generations its price has been ever more inflated by government money above what any relatively free market will bear (and this week's budget announced yet more), and government fear of the political fallout from that bubble bursting precipitated the money-printing that led to runaway inflation of other assets. Buying into the biggest bubble of our lifetimes is scary, but the politics tell us nothing is too precious to be sacrificed for it.

You've got me thinking, I hold a decent range of equities, but I should be looking at REITS. Wish I knew what to look for. Apart from those specialising in growth areas: I expect SGRO or PHP might be worth holding but expensive to buy!

The destination of post-2008 money printing will surely be the eventual demise of confidence in fiat money. Gold is the traditional hedge, but the rise of bitcoin might be more interesting. Or a successor to bitcoin that can dispense with bitcoin's power consumption and require nothing more than a constant-sized array of servers sufficiently distributed around the world to be robust against political interference.

I've also contemplated buying an inflation-linked annuity with a chunk of my assets. That's a gamble on the annuity provider being able to honour it for my lifetime, and a punt on how the government of the day will be willing and able to react when annuity providers go bust. 'Cos that event is likely to correlate with the government itself being even more bust than in the 1970s.

[Dod101]

I have had no faith in say British Land or Land Securities for some years, long before the current problems. I hold PHP and Segro though.

I also hold 3i Infrastructure. Other Infrastructure funds ought to be fine as well.

Apart from that I hold T D Bank. Canadian banks look very secure to me. Otherwise I hold a selection of the usual UK income shares. I live off my investment portfolio and they are an important part of my base income. Other than that I do not see that I can do much against inflation.

Dod

[Mike4]

Also starting to build the % held in cash. Counterintuitive, but this is a good place to be as inflation gets started - market will reprice bonds and stocks.

Following the principle that there is no such thing as a stupid question except the one you were too scared to ask, may I ask what this means please?

In the high inflation environment lots of us foresee coming, why would you want to build the amount of cash you hold? Why would this be "a good place to be"? Surely inflation erodes the value of your cash.

And "market will reprice bonds and stocks". Are you saying stocks will fall in value as interest rates creep up, so cash is actually likely to suffer less?

And I'm not even sure what a bond is, to illustrate my current level of understanding....

Thanks for any expansion you can give.

[UncleEbenezer]

Also starting to build the % held in cash. Counterintuitive, but this is a good place to be as inflation gets started - market will reprice bonds and stocks.

Following the principle that there is no such thing as a stupid question except the one you were too scared to ask, may I ask what this means please?

In the high inflation environment lots of us foresee coming, why would you want to build the amount of cash you hold? Why would this be "a good place to be"? Surely inflation erodes the value of your cash.

And "market will reprice bonds and stocks". Are you saying stocks will fall in value as interest rates creep up, so cash is actually likely to suffer less?

And I'm not even sure what a bond is, to illustrate my current level of understanding....

Thanks for any expansion you can give.

I *think* the idea may be that, although cash loses value, it does so gradually. Whereas other assets might take a sudden and much bigger hit as sentiment shifts (it's recently been happening to the most sensitive assets: c.f. Scottish Mortgage). So moving to cash is a short-term measure to ride out volatility.

Raises all the usual "timing the market" issues.

btw, a bond is a corporate or government IOU, with a fixed interest payment and tradeable.

[TUK020]

Also starting to build the % held in cash. Counterintuitive, but this is a good place to be as inflation gets started - market will reprice bonds and stocks.

Following the principle that there is no such thing as a stupid question except the one you were too scared to ask, may I ask what this means please?

In the high inflation environment lots of us foresee coming, why would you want to build the amount of cash you hold? Why would this be "a good place to be"? Surely inflation erodes the value of your cash.

And "market will reprice bonds and stocks". Are you saying stocks will fall in value as interest rates creep up, so cash is actually likely to suffer less?

And I'm not even sure what a bond is, to illustrate my current level of understanding....

Thanks for any expansion you can give.

I *think* the idea may be that, although cash loses value, it does so gradually. Whereas other assets might take a sudden and much bigger hit as sentiment shifts (it's recently been happening to the most sensitive assets: c.f. Scottish Mortgage). So moving to cash is a short-term measure to ride out volatility.

Raises all the usual "timing the market" issues.

btw, a bond is a corporate or government IOU, with a fixed interest payment and tradeable.

Yes to both UE & Mike4.
Inflation erodes cash over time. Market sentiment will change sharply when it becomes apparent that inflation is on its way.
UE is correct that this is veering towards market timing. I am not proposing to sell up wholesale to be positioned when a crash happens. More of a marginal, hold off reinvesting dividends while I see what is happening.

[Steveam]

Interesting comments above.

I’m of a generation that remembers and lived through inflationary times here in the U.K. In my case it’s left a scar - I’m frightened of inflation having seen elderly family members become impoverished as the value of their savings was eroded. Through family circumstances I also have experience of currency mismatching causing problems.

I’ve tried to make sure my expenditure currency match my income currency (in my case two countries are involved).

I’ve deferred taking the state pension (I’m of an age that the deferral results in an annual increase exceeding 10%). This is a complex calculation as I might die before maximising the amount I get but it’s insurance against longevity with the ultimate backer - a government which can print its own money. (I don’t have any indexed pensions).

My assets are mainly equities but very, very diversified across the world (some U.K. equities, tracker ETFs - world and some regional biases, ITs for specific themes and activities). I hold some Index Linked certificates which are rolled forward and some gold. Cash holdings have been allowed to rise (now 4 times annual expenditure). I own my home outright and might downsize in the next few years.

I’m quite sure the scars of high inflation and/or currency devaluations still scar my thinking and financial behaviour.

Best wishes,

Steve

[tjh290633]

Interesting comments above.

I’m of a generation that remembers and lived through inflationary times here in the U.K. In my case it’s left a scar - I’m frightened of inflation having seen elderly family members become impoverished as the value of their savings was eroded.

It is having seen elderly widows relying on fixed rate annuities and also fixed interest Government stock, being very deprived at a time of high inflation that has made me avoid anything that does not have a chance of beating inflation. Index-linked securities have a chance if you buy them at par on issue, but not necessarily if you buy them later.

I am glad that my investments in equities have outpaced inflation in terms of income provided, and also in capital value.

TJH

[toofast2live]

Equities are ok in “reflationary” inflation times. They kill you in “stagflationary” times, such as the 70s. Then you’re better off in commodities, or real assets like property.

[Alaric]

Following the Budget, there were various predictions of how much extra tax would be paid over the next few years. Given the tax increases were freezes of various allowances, notably the personal tax free allowance and higher rate threshold, these are only going to bring home revenue to the government if taxable earnings increase. but what;s going to drive earnings upwards? It's not as if indirect taxation such as fuel duty increases will put prices up and thus cause a knock on effect as earners look to protect their standard of living.

[jonesa1]

Following the Budget, there were various predictions of how much extra tax would be paid over the next few years. Given the tax increases were freezes of various allowances, notably the personal tax free allowance and higher rate threshold, these are only going to bring home revenue to the government if taxable earnings increase. but what;s going to drive earnings upwards? It's not as if indirect taxation such as fuel duty increases will put prices up and thus cause a knock on effect as earners look to protect their standard of living.

Across the board wage rises in the short term seem unlikely, given we're likely to have quite a spike in unemployment once furlough ends. For jobs where the imbalance between suitable workers and demand favours the workers, we should eventually see wages rise because employers will need to attract & retain staff. That could apply to a lot of jobs which used to rely on large numbers of workers from the EU, including many lower paid jobs, not just more technical areas.

There's also the potential for trades unions to get their act together and become more effective at representing today's workforce, which has changed a lot in the last couple of decades, even before COVID. I'm not confident that will happen though. A brief interaction with one large union a few years ago was quite dispiriting. Their mindset was still based on the model of large numbers of people working in the same place getting organised via mass meetings (very 1970s). This contrasted with the reality for my employer of a widely distributed workforce, largely based on client sites or at home.

Andrew

[1nvest]

Equities are ok in “reflationary” inflation times. They kill you in “stagflationary” times, such as the 70s. Then you’re better off in commodities, or real assets like property.

... the ancient Talmud advocated asset allocation, a third each in land (home), commerce (stocks) and reserves (gold). In the modern global world perhaps £ home value, US$ stock value (US$ being the primary reserve currency, gold is both a commodity and form of global currency).

Rebalancing broadly compares with not rebalancing, tending to achieve similar overall total returns (on average) but where non rebalanced tends towards over-concentration risk (one asset, the best, can become excessively overweight). Rebalancing reduces tilt/concentration risk at the cost of reducing out of the better performing asset(s) to add to poorer performers - but when non-rebalanced periodically the concentration risk backfires to 'level-down' (give back) surplus gains. Overall broadly washes in total return terms, but where on a risk measure concentration risk is more inclined to be critical/fatal (higher risk, so a lower Sharpe ratio overall). For instance TJH HYP (Terry's tweaked HYP) might compare in total return to Pyad's non rebalanced HYP1, maybe even the HYP1 pull ahead, but where HYP1 had drifted to have a large weighting in one stock - and at some point then see that stock fail (or drop significantly).

[1nvest]

Across the board wage rises in the short term seem unlikely, given we're likely to have quite a spike in unemployment once furlough ends.

Where is the anticipated inflation going to come from then? The current youth/working generation have to fund a lot more for themselves than former generations. Uni fees, healthcare, pension savings etc. Whilst on the supply side robotics replaces many workers, so fewer earning, inducing lower demand for goods/services.

The UK debt costs less to service now than in 2007 (pre financial crisis). 500Bn of debt back then cost 4%, nowadays 2Tn of debt costs 1%, i.e. the same 20Bn/year. But where there's been 40% inflation since then, so in real terms it costs less now than back then.

Will the Pound sink such that given we import a lot would drive prices higher, or might the Pound rebound after having already 'paid' for Brexit and Covid?

OP ...

individuals believe that there is a substantial risk that the combination of quantitative easing and fiscal stimulus will result in sustained (hyper)inflation and that the central banks will be slow to react as they don't mind inflating government debt away.

Yes the central bank/BoE may very well look to keep yields low, perhaps even printing even more in order to buy up Gilts and return all of the interest paid by the Treasury on those gilts in order to keep yields low (yield curve control) and hope for inflation such that real returns for investors are negative (5% inflation, 1% gilt yields) that help deflate the debt. But Japan have played that gameplay for years/decades now, without success at driving inflation upward. The primary battle is directed towards avoiding deflation and firing all guns at that. Recently ...

Annual inflation rate in the UK edged up to 0.7 percent in January of 2021 from 0.6 percent in December,

One way the UK could generate inflation is to put up barriers, make it more expensive/awkward to import goods/services in order to drive up prices, which now seems to be the tact taken. But a factor is that any gains on that front could be lost by the Pound relatively rising, where foreign buyers of the Pound even if those Pounds earn 0% might see gains from where those Pounds buy back more of their own currency at a later date.

Rightfully markets should be free (floating). Periodic periods of inflation and deflation in perhaps broadly equal measure. Policy is however has for some time now been only to permit inflation, suppress/attack any risk of deflation - in conflict with natural nature. As such the tendency is towards prolonged periods of flat/no returns instead of enduring a relatively short lived large dip, followed by subsequent 'good gains' (recovery).

Fundamentally its a pass the parcel bomb game, where yes one or more currencies/countries will see that explode in their face and endure a hyperinflation type situation. The EU/EZone is the more inclined to be caught with that IMO. They've massively abused the printing presses. First printed to buy up all bad German debts that had backfired, then moved onto buying up junk bonds. The could continue that to buy up all stock and land/houses - a grand nationalisation. France, former East German (Soviet) and Italy favour such socialist policies.

I suspect the UK is more inclined towards periods of low inflation interspaced with periods of modest inflation (whilst yields are intentionally kept low). Difficult to see where demand led inflation might over-take the present day potential/capacity to over-supply.

[merluzzo]

The comparison with Japan is interesting.

My understanding is that quantitative easing has not been accompanied by a massive fiscal stimulus there. As a result, money created by the BoJ has stayed in the private banks' reserves without increasing substantially the "broad money" in the economy. Hence, low inflation.

Something similar has happened in UK, Europe and USA in 2010-2019.

Now however, the governments are "sending people checks in their mailboxes" through very substantial fiscal stimulus. The furlough thing is an example of that.

This is the very money that was created out of thin air by the central banks, take or leave an intermediary or two (for instance a pension fund that buys a government bond and then resells it to the BoE).

So this time much of the "printed" money is going straight into consumers' pocket, which is expected to result in hyper-inflation.

[1nvest]

Now however, the governments are "sending people checks in their mailboxes" through very substantial fiscal stimulus. The furlough thing is an example of that.

So this time much of the "printed" money is going straight into consumers' pocket, which is expected to result in hyper-inflation.

Into some consumers pockets. Others have lost out. One neighbour receiving perhaps £2500/month in support, another receiving no support and having higher costs and having to draw upon savings in the absence of any wage coming in.

Whilst some may have accumulated during lockdown, others have lost, in some cases all. Redistribution of wealth may have worked out to be net negative overall.

A substantial amount has also been just 'tax deferrals' and where even those that were below paying any tax will be lifted up into paying tax, albeit progressively - on the basis of the 'huge debt' (that in inflation adjusted terms costs considerably less to service now than it did back in 2007). i.e. yet further austerity pencilled in for the next 4 years.

If I previously employed 10, but now having closed down have no intent to open up again when lockdown ends, then the 10 will only have more to spend if they can drop into other work that pays more. Given UK government incompetencies and planned taxation policies there's more inclination to use such a situation to migrate and re-start elsewhere outside of the UK. There's high favouritism in the UK towards the public sector, whilst the private sector has been squeezed incredibly tightly (massive discrimination). Any state where the public sector (golden pensions/pay/conditions etc.) is significantly ahead of the private sector is unlikely to see consumption led inflation, rather the opposite.

Plans such as mass apprentice positions creation when the hourly apprentice wage is £4.15 will keep jobless numbers down, but is little different to still having to pay out benefits. Many firms will just 'train a apprentice' for a year or so, before swapping them out for another apprentice - simply as a means to have the benefit of a £4/hour wage bill.

[stevensfo]

Interesting comments above.

I’m of a generation that remembers and lived through inflationary times here in the U.K. In my case it’s left a scar - I’m frightened of inflation having seen elderly family members become impoverished as the value of their savings was eroded. Through family circumstances I also have experience of currency mismatching causing problems.

I’ve tried to make sure my expenditure currency match my income currency (in my case two countries are involved).

I’ve deferred taking the state pension (I’m of an age that the deferral results in an annual increase exceeding 10%). This is a complex calculation as I might die before maximising the amount I get but it’s insurance against longevity with the ultimate backer - a government which can print its own money. (I don’t have any indexed pensions).

My assets are mainly equities but very, very diversified across the world (some U.K. equities, tracker ETFs - world and some regional biases, ITs for specific themes and activities). I hold some Index Linked certificates which are rolled forward and some gold. Cash holdings have been allowed to rise (now 4 times annual expenditure). I own my home outright and might downsize in the next few years.

I’m quite sure the scars of high inflation and/or currency devaluations still scar my thinking and financial behaviour.

Best wishes,

Steve

Apart from the bit about the state pension and you probably being a bit older, we both have similar experiences and ways of dealing with the future. In the 1970s, my retired grandparents moved from a most idyllic bungalow, beautiful garden with a stupendous view of Torbay and two beaches within 15 minute walk to a pretty normal small house in an inland village far from there. I was a teenager. Only years later did my dad explain how his father had messed up his entire retirement through shunning the stockmarket and relying on saving accounts. These memories returned when I discovered TMF in 1998 and then 2008 when the message of 'the world doesn't stop at Dover' and diversification was drummed into me. I am holding back a little on reinvesting and allowing cash to rise while waiting to see what happens, though I can't see inflation taking off anytime soon. These aren't the 70s.

Our house and garden will be far too big for us when we get older, but my wife refuses to ever think about leaving. Personally, I would sell up, buy some apartments in France, Greece and Devon and spend the rest of my life as a nomad on a never-ending wine and beer-tasting tour!

Steve

[NotSure]

So this time much of the "printed" money is going straight into consumers' pocket, which is expected to result in hyper-inflation.

I think hyper-inflation is defined as in excess of 50% month (Investopedia), so I would guess a few more helicopters would be required yet. But even double-digit annual inflation would be pretty messy if it were to occur any time in the near future. If the prospect of 10 year yields maybe hitting 2% has put the wind up investors, even half of that could be interesting (in the proverbial Chinese sense of the word).

I am still interested to know opinions on your original question, namely might 'value' options such as VHYL, UK, EM , Pacific and European stocks be worth considering at the moment (for those, like myself, concerned about the prospect of rising inflation and rates), in preference to (primarily US/Chinese) growth stocks, where even modest inflation, let alone hyper, significantly reduces the current value of their (hoped for, rather distant) future earnings and puts their current valuations in question? Or would they likely just tank as well? They have certainly not been the place to be for some time now (for people looking to accumulate over the long term, that is).