Four Trade Tips for Stagflation Fears — Part I

In today’s Money Morning…hoping for a miracle…don’t ignore this well-known but important sector…a ‘future-proof’ energy mix…and more…

It’s beginning to feel a lot like the 1970s out there…

Between the collapse of Evergrande, a British power crisis, and ever-rising inflation — things are looking ugly from a macroeconomic perspective. And markets have certainly been getting jittery because of it.

None of which should really be a surprise.

It will be a miracle if central bankers can clean up the mess they’ve created. All they can do right now is sit on their hands and hope a miracle (or a crisis) lands in their lap.

Something…anything to force their hand.

So that means it’s time for you, as an investor, to start thinking about how to respond.

Not just to the possibility of a miraculous continuation of our beloved bull market, but also to prepare for a potential correction. Or worse.

That’s why today, and tomorrow, I’m going to give you some trade tips: ideas that can help you prepare for whatever the market may throw at us in the coming months — good or bad.

And what better way to start than with energy…

Trade Tip #1: Ol’ Reliable

If there is any sector or industry that is worth having exposure to in times of turbulence, it is energy.

Oil in particular is a key market to take note of. After all, the price of oil is often used as an indicator of where inflation may be headed. Meaning that if the price of oil is rising, inflation probably is too — and vice versa.

For that reason, oil and gas companies are a great place to start if you’re looking for an inflationary hedge. The kind of investment that you could consider somewhat ‘safe’ — due to its historically strong resilience during inflationary periods.

Granted, I am obliged to point out that this doesn’t make it risk-free. As any experienced investor should know.

Having said that, the outlook for oil and gas companies in Australia is particularly compelling.

There are expectations that the four biggest petroleum businesses are set to double their investment spending over the coming years. With an anticipated $6 billion to be devoted to new projects and ventures during the next five years.

And this doesn’t even account for the opportunities from smaller players or explorers — up-and-coming companies that could carve out value for themselves in this huge market. Particularly given the rapid and seemingly stubborn rise of natural gas prices recently.

So don’t ignore this well-known but important sector.

Discover our top three ASX-listed pot stocks in 2021. Click here to learn more.

Trade Tip #2: New Energy

My second piece of advice for you, whether you’re worried about a market correction or not, is ‘new energy’.

What do I mean by new energy?

Pretty much anything that isn’t a fossil fuel…

Wind, solar, hydro, geothermal, hydrogen, and more are all also great places to invest. As well as the ancillary sectors that will help prop them up — like battery storage technology.

All of these industries and innovations are worth taking a look at. Albeit, some more so than others.

Hydrogen, for instance, is probably the most-exciting choice for a ‘future-proof’ energy mix. A fuel that is not only abundant but also highly versatile. In fact, with enough investment and infrastructure, hydrogen could more than likely become our sole source of power.

That’s why it is worth paying attention to, and potentially investing in.

Having said that, battery storage technologies should also be on your radar. Solutions that will not only enable greater use and efficiency of many renewable energy sources, but also just better energy efficiency in general.

After all, it may shock you to learn that 66% of energy used to create electricity is wasted by the time it reaches the average consumer. A limitation that many of these new energy solutions are aiming to reduce or remove entirely.

A factor that will make many companies involved in this space a compelling investment for years to come. Particularly for any businesses that are already well established.

If, however, energy markets — new and old — aren’t your cup of tea, then tune in tomorrow for part II of this essay. I’ll be covering two more trade tips that I believe every investor should consider for the near-term future.

Because whatever the market decides to do, it is worth being prepared given the volatile outlook.


Ryan Clarkson-Ledward Signature

Ryan Clarkson-Ledward,
Editor, Money Morning

PS: Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks. For information on how to subscribe and see what Ryan’s telling subscribers right now, click here.

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks by dissecting the latest events affecting the world.

To find out more about the publications Ryan works on and how you can subscribe, please click on the corresponding link here:

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