Every culture has its own particular boogeyman. In the Netherlands, the Bokkenrijders (or “buck riders”) are ghost thieves who ride flying goats. In Germany, the Butzemann (“he who makes a racket”) is a faceless goblin shrouded in a cloak. In Spain, the Hombre del Saco (“sack man”) kidnaps naughty children and carries them away in a sack. Japan’s Kappa (“river spawn”) drowns kids who play too close to water. The list of the world’s monsters goes on.

On Wall Street, the boogeyman is inflation.

The economy is poised for rapid growth, prompting some investors to worry that the inflation beast will go on a rampage. Inflation erodes investment gains, drives up interest rates, and kills stock market rallies. Below, I’ll explain why out-of-control inflation is unlikely. I’ll also highlight an investment method that makes big profits, regardless of inflation trends.

Stocks closed mostly lower on Tuesday, as inflation fears continued to bedevil markets. The Dow Jones Industrial Average fell 127.58 points (-0.39%), the S&P 500 declined 6.28 points (-0.16%), and the tech-oriented NASDAQ Composite rose 11.86 points (+0.09%). In pre-market futures trading Wednesday, stocks were essentially flat.

Fiscal and monetary stimulus initiatives are hastening the recovery, causing concerns that the economy will overheat. Goldman Sachs (NYSE: GS) recently predicted that the U.S. economy will post gross domestic product (GDP) growth of 7% in 2021, a robust rate that’s on a par with China’s projected GDP growth for the year.

Better bottom lines…

Corporate earnings growth is picking up as well. For the first quarter of 2021, the estimated earnings growth rate for the S&P 500 is 22.1%, according to research firm FactSet. If that percentage turns out to be the actual growth rate for the quarter, it will mark the highest year-over-year earnings growth reported by the index since Q3 2018 (26.1%).

Earnings revisions to the upside are getting aggressive. Estimated earnings for the first quarter have increased by 5.6% since December 31, 2020. During a typical quarter, analysts usually reduce earnings estimates.

On December 31, the estimated earnings growth rate for Q1 2021 was 15.5%. As of this writing, seven sectors have higher earnings growth rates or smaller earnings declines today (compared to December 31), due to upward revisions to earnings estimates. Analysts expect double-digit earnings growth for all four quarters of 2021.

Stocks are pricey, but in light of these earnings estimates, not dangerously so. The forward 12-month price-to-earnings (P/E) ratio for the S&P 500 is 21.9.

The energy sector has posted the largest decrease in its expected earnings decline of all 11 S&P 500 sectors since the start of the first quarter (to -14.0% from -61.2%). The sector also has enjoyed the largest increase in overall share prices (+39.8%) of all sectors since December 31.

Read This Story: From Worst to First: Energy Bounces Back

As energy demand increases and global crude stockpiles diminish, oil prices have soared. The result has been sharply higher gasoline prices at the pump, further feeding worries about inflation.

The U.S. could soon see gasoline prices of $4 per gallon, according to the latest AAA data. The group found that Americans are paying 14% more at the pump this month than in February.

However, despite rising prices for oil and other commodities, I don’t see inflation as a major threat. One reason: With 9.5 million Americans out of work and scores of employers still struggling, slack in the labor market is limiting wage growth. In fact, wage growth recently took a steep fall (see chart).

Inflation projections for 2021 are low. The Federal Reserve projects that core inflation, which excludes the volatile costs of food and energy, will run at about 2.2% in 2021, up from 1.6% at the end of 2020. The major impetus behind climbing inflation right now are rising energy prices.

Partly driving the inflation debate is pre-fixed ideology. Those who dislike the concept of government stimulus tend to raise the specter of inflation, regardless of the data. Moreover, many people who were old enough to have directly experienced the high inflation of the 1970s still bear the psychic scars.

Don’t get me wrong, I’m not asserting that rising inflation is impossible in the future. Commodity prices as a whole are climbing, a leading indicator of upward price pressures. But considering the depth of our economic hole, spikes of inflation are likely to be moderate and temporary, before inflation settles into a more acceptable range.

Federal Reserve Chair Jerome Powell, as clear-eyed a pragmatist as you can find in Washington, has flatly stated that the prospect of excessive inflation doesn’t concern the central bank and he has vowed to maintain dovish monetary policy over the long haul.

But maybe you’re weary of all the pandemic-era drama. I wouldn’t blame you. The good news is, there’s an investing methodology that’s immune to inflation risk.

This trading system was devised by my colleague Jim Fink, the chief investment strategist of Velocity Trader, Options For Income, and Jim Fink’s Inner Circle.

By using Jim’s proprietary trading system, you can make steady profits regardless of inflation trends, economic ups and downs, or even the course of the coronavirus. To learn Jim’s wealth-building secrets, click here.

John Persinos is the editorial director of Investing Daily. To subscribe to his video channel, follow this link. Want to join the great debate about inflation? Let’s get a conversation going. Send your comments to: mailbag@investingdaily.com.