Welcome to my latest video presentation. If you’d prefer to read a condensed transcript, see the article below.

I get a high volume of letters to the editor, culled from various email addresses. The best way to reach me is: mailbag@investingdaily.com.

Below, I answer a sampling of emails that are indicative of the greatest concerns among investors right now. I hasten to add, SEC regulations prevent me from providing individualized advice. I strive for answers of universal applicability.

Not surprisingly, the largest number of questions concern rising inflation.

On Thursday, the U.S. Bureau of Labor Statistics reported that inflation, as measured by the consumer price index (CPI) for all urban consumers in the U.S., pushed higher in January, rising 7.5% from a year earlier, the largest 12-month increase since February 1982. That number is hotter than the consensus estimate of 7.3% (see my video for further data).

Inflation hedges…

Many readers asked for advice on inflation hedges, as reflected by this email:

“The latest CPI numbers are scary. Rising inflation erodes investment gains, so my portfolio needs inflation hedges. What do you recommend?” — David K.

About 5%-10% of your portfolio’s hedges sleeve should contain gold, the traditional inflation hedge.

The value of gold tends to increase as the purchasing power of the dollar declines. My preferred way to profit from increases in gold prices is through small-cap miners that can put corporate operating leverage to work.

I also recommend vital commodities such as copper, as well as inflation-protected bonds.

The bullish thesis…

“As inflation and interest rates rise, I’m finding it difficult to remain bullish. Can you provide a few reasons for optimism?” — Martha H.

I’m generally bullish for 2022. Corporate earnings are solid; Omicron appears to be peaking; China is actually loosening its monetary spigot; companies are stepping up share buybacks; and management guidance during Q4 earnings calls increasingly indicates pricing power combined with resilient consumer demand.

Also keep in mind, stocks have historically performed well amid rising inflation and expectations of Federal Reserve rate hikes. Don’t get frazzled by the recent bout of volatility; stick to your long-range strategy.

The economic cycle…

“How would you describe the current phase of the economic recovery and accordingly, what investment plays make the most sense?” — Jim D.

We’re leaving the fast-growth early cycle. The Fed’s evolution from emergency stimulus, to tapering, to rate hikes indicates that the economic recovery has progressed to the mid-cycle phase.

The mid-cycle is typically the longest phase, characterized by moderate growth. Economic activity gains momentum, credit growth is strong, and corporate profitability is healthy. During the mid-cycle, sectors such as basic materials and industrials confer the best profit opportunities.

Airlines vs. telecoms…

“It appears there will be a legal confrontation over 5G in the USA between airlines and at least the major telecom carriers. What do you foresee as the likely investment implications for stocks in the 5G arena for the near to medium term?” — Charles K.

I expect this confrontation between airlines and telecoms to quickly pass. The stakes are too high. The roll out of ultra-fast 5G (fifth-generation) wireless networks has achieved an unstoppable momentum. Companies involved in 5G stand to reap enormous profits.

The concern among airlines about interference from 5G already has been resolved satisfactorily in European countries, by reducing the power of 5G signals near airports. We’ll probably see the same solution implemented here.

Editor’s Note: Reader opinion is important to us, which is why I place a high priority on answering your emails. Along those lines, coming soon is a webinar between Rudy Soto, chief of our customer service department, and Jim Fink, chief investment strategist of Options For Income, Velocity Trader, and Jim Fink’s Inner Circle.

Keep an eye out for this webinar. Rudy will ask Jim the most pressing questions posed by readers. Have a question for Jim? If you give us permission and we pick your question, we’ll read your name and city during the webinar. Send your questions to: mailbag@investingdaily.com.

John Persinos is the editorial director of Investing Daily.

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