Portfolio Spotlight Series 2 – Disney $DIS

In Portfolio Spotlight Series 2 – I will be going through each holding in my portfolio v2.0 and the selection criteria for its entry. Stocks are either
1. Great companies with consistent earnings, free csh flow, strong competitive moats. These are core holdings.
2. Potential growth companies with breakout earnings, growing competitive moats. These are holdings which typically are kept within 5% of the portfolio.
3. Geographical / sector diversifications. These are meant for diversification purpose and are kept within 5% if they are from emerging markets (e.g. China/HK) .

Allocation as of August 2021

Next up in Portfolio Spotlight Series 2 is DIS. It currently occupies 8% of my portfolio and I have strong conviction in this stock mid to long-term.

The Walt Disney Co. is a diversified international family entertainment and media enterprise. It operates through the following segments: Media Networks, Parks, Experiences and Products, Studio Entertainment and Direct-to-Consumer and International (DTCI). The Media Networks segment includes cable and broadcast television networks, television production and distribution operations, domestic television stations, radio networks and stations. The Parks, Experiences and Products segment owns and operates the Walt Disney World Resort in Florida; the Disneyland Resort in California; Aulani, a Disney Resort & Spa in Hawaii; the Disney Vacation Club; the Disney Cruise Line; and Adventures by Disney. The Studio Entertainment segment produces and acquires live-action and animated motion pictures, direct-to-video content, musical recordings and live stage plays. This segment distributes films primarily under the Walt Disney Pictures, Pixar, Marvel, Lucasfilm and Touchstone banners. The DTCI segment licenses the company’s trade names, characters and visual and literary properties to various manufacturers, game developers, publishers and retailers throughout the world. It also develops and publishes games, primarily for mobile platforms, and books, magazines and comic books. This segment also distributes branded merchandise directly through retail, online and wholesale businesses. The company was founded by Walter Elias Disney on October 16, 1923 and is headquartered in Burbank, CA.

1)Consistent Revenue Growth

2)Consistent Free Cash Flow

DIS has been having consistent free cash flow for the past 3 years. FY2019 was red due to closure of its parks during COVID 19 pandemic. FY2020 has been a revelation due to the popularity of Disney+

3)Market Cap Growth

As of September 2021 Walt Disney has a market cap of $225 Billion.

DIS Market Cap since its inception

4)Consistent Net Income Multiple

DIS has had consistent net income multiple. FY20 was a one-off due to the closure of its parks and cruises as a result of the COVID 19 pandemic. However, this is only temporary and Disney will recover and resume its consistent trajectory. This indicates a management team which is efficient in handling its bottom line. A great management team is very important!

5) Future growth

This last factor is fundamental analysis. Does DIS have future market growth driver(s) ? The answer is yes !

Most of DIS future growth drivers will leverage on

  1. Theme Park , Cruise Line Reopenings
  2. Continued Business to Consumer business division expansion
    1. Disney+
    2. Hotstar
    3. Hulu, and
    4. ESPN+

Portfolio Spotlight Series 2 – Amazon $AMZN

In Portfolio Spotlight Series 2 – I will be going through each holding in my portfolio v2.0 and the selection criteria for its entry. Stocks are either
1. Great companies with consistent earnings, free cash flow, strong competitive moats. These are core holdings.
2. Potential growth companies with breakout earnings, growing competitive moats. These are holdings which typically are kept within 5% of the portfolio.
3. Geographical / sector diversifications. These are meant for diversification purpose and are kept within 5% if they are from emerging markets (e.g. China/HK) .

Allocation as of August 2021

Next up in Portfolio Spotlight Series 2 is AMZN. It currently occupies 28% of my portfolio and I have strong conviction in this stock mid to long-term. I have since rebalance it to 5% of my portfolio weightage and taken profit.

Amazon.com, Inc. engages in the provision of online retail shopping services. It operates through the following business segments: North America, International, and Amazon Web Services (AWS). The North America segment includes retail sales of consumer products and subscriptions through North America-focused websites such as http://www.amazon.com and http://www.amazon.ca. The International segment offers retail sales of consumer products and subscriptions through internationally-focused websites. The Amazon Web Services segment involves in the global sales of compute, storage, database, and AWS service offerings for start-ups, enterprises, government agencies, and academic institutions. The company was founded by Jeffrey P. Bezos in July 1994 and is headquartered in Seattle, WA.

1)Consistent Revenue Growth

2)Consistent Free Cash Flow

AMZN has been having consistent free cash flow for the past 8 years !

3)Market Cap Growth

As of September 2021 Amazon has a market cap of $1.761 Trillion. This makes Amazon the world’s 5th most valuable company by market cap according to our data.  

AMZN Market Cap since its inception

4)Consistent Net Income Multiple

AMZN has had consistent net income multiple. This indicates a management team which is efficient in handling its bottom line. A great management team is very important!

5) Future growth

This last factor is fundamental analysis. Does AMZN have future market growth driver(s) ? The answer is yes !

Most of AMZN future growth drivers will leverage on

1. Amazon Web Services (AWS)

2. Amazon Prime

3. Amazon India

4. Amazon’s third leg of business (Other than AWS, E-Commerce)

  1. Amazon’s online pharmacy platform
  2. its fashion initiatives, or
  3. its Amazon Fresh grocery store footprint

https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/amazon-could-see-revenue-more-than-double-by-2025-as-retail-business-grows-62718086

Portfolio Spotlight Series 2 – Proctor & Gamble $PG

In Portfolio Spotlight Series 2 – I will be going through each holding in my portfolio v2.0 and the selection criteria for its entry. Stocks are either
1. Great companies with consistent earnings, free cash flow, strong competitive moats. These are core holdings.
2. Potential growth companies with breakout earnings, growing competitive moats. These are holdings which typically are kept within 5% of the portfolio.
3. Geographical / sector diversifications. These are meant for diversification purpose and are kept within 5% if they are from emerging markets (e.g. China/HK) .

Allocation as of August 2021

Next up in Portfolio Spotlight Series 2 is PG. It currently occupies 12% of my portfolio and I have strong conviction in this stock mid to long-term.

Procter & Gamble Co. engages in the provision of branded consumer packaged goods. It operates through the following segments: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care. The Beauty segment offers hair, skin, and personal care. The Grooming segment comprises of shave care like female and male blades and razors, pre and post shave products, and appliances. The Health Care segment includes oral care products like toothbrushes, toothpaste, and personal health care such as gastrointestinal, rapid diagnostics, respiratory, and vitamins, minerals, and supplements. The Fabric and Home Care segment consist of fabric enhancers, laundry additives and detergents, and air, dish, and surface care. The Baby, Feminine and Family Care segment sells baby wipes, diapers, and pants, adult incontinence, feminine care, paper towels, tissues, and toilet paper. The company was founded by William Procter and James Gamble in 1837 and is headquartered in Cincinnati, OH.

1)Consistent Revenue Growth

2)Consistent Free Cash Flow

PG has been having consistent free cash flow for the past 5 years

3)Market Cap Growth

As of September 2021 Procter & Gamble has a market cap of $349.79 Billion. This makes Procter & Gamble the world’s 21th most valuable company by market cap according to our data. 

PG Market Cap since its inception

4)Consistent Net Income Multiple

PG has had consistent net income multiple. This indicates a management team which is efficient in handling its bottom line. A great management team is very important!

5) Future growth

This last factor is fundamental analysis. Does PG have future market growth driver(s) ? The answer is yes !

Most of PG future growth drivers will leverage on

Procter & Gamble’s Generic Strategy (Porter’s Model)

Procter & Gamble uses differentiation as its generic strategy for competitive advantage. Differentiation involves developing the uniqueness of the business and its products to attract target customers. In this case, Procter & Gamble highlights quality and value in its consumer goods. For example, the company offers high quality cleaning agents, like Tide laundry detergent, at affordable prices. Based on this generic competitive strategy, a suitable strategic objective is to maintain P&G’s high investments for R&D to ensure high-quality and valuable products. Another strategic objective based on Procter & Gamble’s generic strategy of differentiation is to maintain effective marketing strategies that emphasize the uniqueness of such products. Such product uniqueness determines pricing and promotional activities. These considerations are included in Procter & Gamble’s marketing mix or 4Ps.

The cost leadership generic strategy (also known as the low cost provider strategy) is partially applied on some of Procter & Gamble’s products, focusing on cost or pricing to achieve competitive advantage. For example, Pantene hair care products are priced relatively lower compared to competitors like Unilever’s Dove hair care products. Procter & Gamble’s marketing mix also considers this generic competitive strategy. A strategic objective based on the cost leadership generic strategy is to develop Procter & Gamble’s competitive advantage based on cost-minimization approaches. For example, automation is increasingly used to minimize cost and maximize efficiency in Procter & Gamble’s production processes.

Procter & Gamble’s Intensive Strategies (Intensive Growth Strategies)

Market Penetration (Primary Intensive Strategy). The Procter & Gamble Company’s primary intensive growth strategy is market penetration. In this intensive strategy, the main aim is to increase the company’s market share. Procter & Gamble does so through marketing campaigns to increase consumer awareness about the company’s consumer goods. This strategy is especially significant for low-performing products in the market. In addition, Procter & Gamble implements this intensive strategy through beneficial agreements with retailers. For example, P&G grows its market share by offering higher retail profit margins for some large retailers. In return such retailers display Procter & Gamble’s products in prominent locations or shelves in their stores. The differentiation generic strategy creates competitive advantage that helps increase success in applying the market penetration intensive strategy. A strategic objective based on this intensive growth strategy is to increase Procter & Gamble’s market share through aggressive marketing.

Product Development (Secondary Intensive Strategy). Product development is used as a secondary intensive growth strategy in Procter & Gamble’s business. This intensive strategy involves design and production processes for products that attract target customers. Procter & Gamble applies product development to support continuous business growth, while addressing competition. For example, P&G develops new products to increase its share of the global consumers goods market. In addition, Procter & Gamble increases its competitiveness by continually enhancing current products. The differentiation generic strategy directly determines the kinds of products that the company develops, especially in terms of competitive advantage based on quality and value. A strategic objective associated with this intensive strategy is to grow Procter & Gamble through continuous innovation.

Market Development. The Procter & Gamble Company uses market development as a supporting intensive growth strategy. Market development contributes to the company’s growth through entry into new markets or market segments. For example, Procter & Gamble could enter new market segments when it creates an entirely new product line or when it changes its market focus. In this way, Procter & Gamble can expect a new revenue stream. The generic strategy of differentiation makes it easier for P&G to enter new markets or market segments when implementing this intensive growth strategy. Also, a strategic objective based on market development is to increase Procter & Gamble’s R&D investment for new product lines, or to reform its marketing strategies to enter new segments in a growing or stable consumer goods market.

Diversification. Diversification is one of Procter & Gamble’s supporting intensive growth strategies. This intensive strategy involves establishing new business operations. For example, every acquisition and corresponding business diversification in Procter & Gamble’s history has led to considerable growth. However, this intensive growth strategy is considerably difficult to implement because of its large-scale effects on P&G’s business organization. For instance, each acquisition leads to adjustments in Procter & Gamble’s organizational structure. The differentiation generic strategy helps build competitive advantage the company needs to succeed in new business operations. Also, this intensive strategy leads to the strategic objective of using an aggressive approach to acquire other firms to grow Procter & Gamble’s business.

Portfolio Spotlight Series 2 – Lockheed Martin $LMT

In Portfolio Spotlight Series 2 – I will be going through each holding in my portfolio v2.0 and the selection criteria for its entry. Stocks are either
1. Great companies with consistent earnings, free csh flow, strong competitive moats. These are core holdings.
2. Potential growth companies with breakout earnings, growing competitive moats. These are holdings which typically are kept within 5% of the portfolio.
3. Geographical / sector diversifications. These are meant for diversification purpose and are kept within 5% if they are from emerging markets (e.g. China/HK) .

Allocation as of August 2021

Next up in Portfolio Spotlight Series 2 is LMT. It currently occupies 16% of my portfolio and I have strong conviction in this stock mid to long-term.

Headquartered in Bethesda, Maryland, Lockheed Martin Corporation is a security and aerospace company. It operates through four segments. Aeronautics segment is engaged in the research, design, development, manufacture, support and upgrade of military aircraft, including combat and air mobility aircraft, unmanned air vehicles and related technologies. Missiles and Fire Control segment provides air and missile defense systems; fire control systems; manned and unmanned ground vehicles, and energy management solutions. Rotary and Mission Systems segment provides design, manufacture, service and support for various military and commercial helicopters, surface ships, sea and land-based missile defense systems, radar systems, sea and air-based mission and combat systems, command and control mission solutions, cyber solutions, and simulation and training solutions. Space segment is engaged in the research and development, design, engineering and production of satellites, missile systems and space transportation systems.

1)Consistent Revenue Growth

2)Consistent Free Cash Flow

LMT has been having consistent free cash flow for the past 5 years

3)Market Cap Growth

As of September 2021 Lockheed Martin has a market cap of $98.58 Billion. This makes Lockheed Martin the world’s 159th most valuable company by market cap according to our data.

LMT Market Cap since its inception

4)Consistent Net Income Multiple

LMT has had consistent net income multiple. This indicates a management team which is efficient in handling its bottom line. A great management team is very important!

5) Future growth

This last factor is fundamental analysis. Does LMT have future market growth driver(s) ? The answer is yes !

Most of LMT future growth drivers will leverage on

1) Ramping Geopolitical Tensions

Global geopolitical tensions have been ramping up even before the current pandemic. With violent protests springing up all around the world, global instability appears to be on the rise. The US-China relationship, in particular, is growing even more unstable as these two nations’ interests continue to diverge.

The trade war, Hong Kong protests, and coronavirus outbreaks are just a few of the major events putting the US-China relationship under strain. Many experts even think that the US and China are headed towards a Cold War. Such a scenario will put Lockheed Martin in an increasingly vital position.

2) Proposed Acquisition of rocket engine maker Aerojet Rocketdyne

LMT’s proposed acquisition of  rocket engine maker Aerojet Rocketdyne will only serve to increase its moat and competitiveness against its competitors such as Northrop Grumman’s merger with Orbital ATK. There are signs that the merger may be approved by FTC (Federal Trade Commission) with influence by Congress.

https://www.reuters.com/business/aerospace-defense/exclusive-lockheeds-aerojet-deal-gets-support-13-members-congress-letter-2021-09-01/

3) Fairly priced PE

PE vs Industry: LMT is good value based on its PE Ratio (13.8x) compared to the US Aerospace & Defense industry average (21.9x).

Portfolio Spotlight Series 2 – CVS Health Corp $CVS

In Portfolio Spotlight Series 2 – I will be going through each holding in my portfolio v2.0 and the selection criteria for its entry. Stocks are either
1. Great companies with consistent earnings, free cash flow, strong competitive moats. These are core holdings.
2. Potential growth companies with breakout earnings, growing competitive moats. These are holdings which typically are kept within 5% of the portfolio.
3. Geographical / sector diversifications. These are meant for diversification purpose and are kept within 5% if they are from emerging markets (e.g. China/HK) .

Allocation as of August 2021

Next up in Portfolio Spotlight Series 2 is CVS. It currently occupies 11% of my portfolio and I have strong conviction in this stock short to mid-term.

CVS Health is a different kind of health care company. It is a diversified health services company with nearly 300,000 employees united around a common purpose of helping people on their path to better health. In an increasingly connected and digital world, it is meeting people wherever they are and changing health care to meet their needs. Built on a foundation of unmatched community presence, its diversified model engages one in three Americans each year. From its innovative new services at Health HUB locations, to transformative programs that help manage chronic conditions, it is making health care more accessible, more affordable and simply better.

1)Consistent Revenue Growth

2)Consistent Free Cash Flow

CVS has been having consistent free cash flow for the past 3 years

3)Market Cap Growth

As of September 2021 CVS Health has a market cap of $115.42 Billion. This makes CVS Health the world’s 135th most valuable company by market cap. As you can see, it has been growing its market cap consistently over the last 20 years.

CVS Market Cap since its inception in 2001

4)Consistent Net Income Multiple

CVS has had consistent net income multiple. This indicates a management team which is efficient in handling its bottom line. A great management team is very important!

5) Future growth

This last factor is fundamental analysis. Does CVS have future market growth driver(s) ? The answer is yes !

Most of CVS future growth drivers will leverage on

  1. Covid 19 Vaccine Boosters
  2. Covid 19 Variants Of Concern
  3. PE vs Industry: CVS is good value based on its PE Ratio (15.9x) compared to the US Healthcare industry average (23.3x).
pattern honeycomb bee pollen

Beesy !!

Sometimes, there are moments in life where you just feel that so many things are going on at the same time.

This is happening to me right now.

First of all, I’m working full-time in the IT sector , specifically in the cybersecurity domain. Recently i have decided to look for greener pastures. It was not an easy decision as i had been working for close to 5 years in my company. but when the ship is sinking and the captain had left, you really need to look for a lifeboat too . Think you know what i mean.

Second , I’m also moving house ! Yes , in the same period as changing my job. What a coincidence ! I’m upgrading from my current house which is called a HDB (Housing Development Board) flat to a condominium . These are common housing terminologies in Singapore ( Yes I’m staying in Singapore – the little red dot of the world )

Third, i also needed to look for a nursery for my second daughter as well which is in a location suitable for daily drop-off and pickup. This also required a fair bit of time to scout and survey before we decided on a suitable school.

Three major events in my life overlapping with each other in the same few months. Really really beesy these few months and hence i had no choice but to pull myself back a bit from my blog.

Nevertheless, i still managed to squeeze a teeny bit of time and wrote my blog updates albeit less frequently. Hope to go back to my normal frequency and output probably by 4th quarter of 2021.

What about you – my readers ? Have you also ever went through similar convergence of major life events and how did you manage to go through it ? Do post your comments below !

Portfolio update – August 2021

The collaborative fund performance
1. increase from 29% to 31.83% from July to August 2021 – a 3% improvement! I have deployed a diversification approach for the month of August. Many of the stocks picked up bullish gains which help in the portfolio performance.

2. increase from NAV of 246,765.05 to 280,055.80 from July to August 2021.

In summary, August has been a good month for the fund. I have kept PLTR and CXSE to 5% weightage only in the fund as they are still considered volatile stock and ETF in emerging markets respectively.

Moving forward, i am showing the portfolio allocation base on percentage which i feel is more useful for you readers.

  1. Looking to rebalance my Amazon stock to 5% from 28% and take profit 🙂
  2. Looking to add more MSFT shares to up to 20% weightage

For the portfolio performance back in July 2021, you can read my post here.

Looking forward to a better performance from the fund in September !

High Impact Events – August 2021 Week 4 #Jackson Hole Symposium

Here are the high Impact Events for this coming week.

All eyes will be on the Jackson Hole Symposium on 27 August.

This year’s meeting sees the main focus shift onto the Federal Reserve (Fed), with many believing we could see Jerome Powell lay the groundwork for a tapering programme given the rise in inflation.

That surge in both core personal consumption expenditures (PCE) and consumer price index (CPI) inflation has brought forward expectations for tightening at the Fed, although there are still some who hope that we could see price pressures ease as things normalize.

The idea is to utilize monetary policy to drive down unemployment, with inflation allowed to overshoot the 2% target for a period of time. It is worthwhile noting that the US economy remains 5.7 million jobs short of where it was before the Covid-19 pandemic.

The Fed have employed a policy of rock-bottom interest rates and a lofty $120 billion worth of monthly purchases of Treasuries and mortgage-backed securities (MBS).

The chart below highlights the unprecedented rate of asset purchases undertaken over the course of this crisis, with the sharp rise in Treasury securities in stark contrast to the gradual efforts in the wake of the 2007 financial crisis.

That highlights how the Fed will want to start to trim back on the size of monthly purchases before long, with the rise in inflation giving one cause to start tightening monetary policy.

However, while it has been commonly accepted that Powell will look towards the Jackson Hole Symposium as a perfect platform to outline the timing and size of their tapering, we have started to see some uncertainty creep in of late.

Interestingly, while markets have long been confident of an economic recovery and tightening of monetary policy, the CFTC positioning in the two-year treasury notes does highlight a potential shift in that tone.

The move back into positive territory this month marks the first time in three-years that the market has betted against higher yields and tighter Fed policy. That is notable given the fact that we had been looking towards this meeting as a basis for tighter monetary policy

Part of the reason for this recent uncertainty is the rise of the Delta variant, with the country exhibiting a sharp increase in cases over the course of the past two-months.

While US President Joe Biden will be unwilling to establish fresh restrictions, there are concerns that a lack of controls could see the health care system under pressure.

That rise tallies up perfectly with the increase in the Delta variant as a share of the cases in the country. Unfortunately, there is no guarantee that the Delta variant is the worst iteration of the virus.

FOMC minutes highlight lack of consensus

Last week saw the release of the minutes from the Federal Open Market Committee (FOMC), with the group striking a somewhat mixed tone. On one hand, members appeared to be confident that their employment targets could be achieved this year, laying the basis for a potential tightening of policy. The minutes highlighted that the Fed do expect to taper at some point this year, as they seek to trim the monthly purchases of $120 billion of Treasury bonds and mortgage-backed securities.

However, timing remains a key concern that appears to divide opinion. With differing opinions on whether to prioritise unemployment, inflation, or Covid-19 cases as a key concern, it seems the group are finding it more difficult to find a consensus than many had thought.

With that in mind, we head into this Jackson Hole Symposium with far less confidence that Powell will lay out a definitive blueprint of how and when the Fed will starting trimming their asset purchase programme.

This has resulted in the market adopting a bullish stance that the Fed may rein in their hawkish stance regarding the tapering programme.

The Nasdaq has been one of the biggest benefactors from the ongoing loose monetary policy stance from the Fed. That is reflected in the fact that assets typically flow towards value stocks and out of the Nasdaq when treasury yields rise and central banks tighten policy.

With that in mind, this index looks to be a major benefactor if Powell decides to hold off on explicitly laying out a tapering plan. The longer the Fed holds off, the longer the Nasdaq will likely outperform. With that in mind, last week’s FOMC minutes have led to a swift record high for the index after a 61.8% retracement. Those gains are likely to be heightened if we are to see a continued dovish stance from Powell.

On the flip-side, a hawkish stance and clear roadmap for tapering this year would likely see this index fall back as traders become fearful that the huge stimulus package could soon be unwound.

Stay cautious and as always , remember to put stop losses for bubble stocks

High Impact Events – August 2021 Week 3 #FOMC

Here are the high Impact Events for this coming week.

The CPI has been increasing every month . It will come as no surprise that for August, the CPI should follow the same trend, up.

indeed , a rising CPI will result in a higher interest rate. The US Treasury 10 yr note yield has been on an slight upward trend even though the overall trend is still bearish.

Fed officials have started to beat the tapering drums. This past week, another two senior policymakers threw their weight behind dialing back stimulus soon. One of them was Vice Chairman Clarida, the Fed’s second in command. The other was Board Governor Waller, who went as far as saying that if the next couple of employment reports are strong, the Fed should get the ball rolling in September already. Both are permanent voters in the FOMC, so their views carry weight. 

The dollar’s path this week will depend on the CPI result. It could determine whether the prospect of a September tapering announcement is realistic or not. The hotter inflation is, the better the chances that the Fed gets moving early. 

In general, this week should be relatively calm for equities as long as TNX maintains its overall bearish trend even though there is a minor bullish trend up this week in anticipation of a higher CPI.

Inflation and Deflation Forces coexisting ?!

I notice something strange is occurring silently in the background without much fanfare.

The Fed may have already started tapering of bond purchases since Q1 2021. What do i mean ?

Below is the M2 graph as of 1st August 2021. The M2 graph denotes the level of money supply in the US economy.

The higher the M2, the higher the supply and in turn, inflationary forces kick in.

The lower the M2, the lower the supply and hence deflationary forces kick in.

What this means is that the Federal Reserve had been slowly reducing the bond purchase programme (Quantitative Easing) from Q1 2021.

During times of deflation, goods and assets decrease in value, meaning that cash and other liquid assets become more valuable. The very nature of deflation discourages investment in the stock market, and decreased demand for stocks can have a negative effect on the value of stocks.

When deflation is a threat, investors go defensive by favoring bonds. High-quality bonds tend to fare better than stocks during periods of deflation, which bodes well for the popularity of government-issued debt and AAA-rated corporate bonds.

On the equity side, companies that produce consumer goods that people must buy no matter what (think toilet paper, food, drugs) tend to hold up better than other companies. These are often referred to as defensive stocks. Dividend-paying stocks are another consideration in the equity space.

Wait But there’s also inflation?

The effects of COVID-19 are what truly caused inflation to rear its head. The closing of retail and global travel resulted in the cutting off of supply chains which in turn increases the price of goods and assets (e.g. the lack of lumber is causing housing prices to increase due to lack of supply )

In the current climate, it seems that both deflationary and inflationary forces are in play right now . The inflationary forces are due to the lingering effects of the many variants of COVID-19 (e.g. the Delta Variant)

Planning for Both Inflation and Deflation

Sometimes it’s hard to tell whether inflation or deflation is the bigger threat. When you can’t tell what to do, plan for both. A diversified portfolio that includes investments that thrive during inflationary periods and investments that flourish during deflationary periods can provide a measure of protection, regardless of what happens in the economy.

Diversification is the key when you don’t have the desire to attempt to properly time the inflation/deflation cycle. Blue-chip companies tend to have the strength to weather deflation and also pay dividends, which helps when inflation rises to the point where valuations stagnate.

Diversifying abroad is another strategy, as emerging markets are often exporters of in-demand commodities (a hedge against inflation) and not perfectly linked with the domestic economy (protection against deflation). However it is also unfortunate and coincidental that China chose to implement its regulatory cleansing during this period. This may result in the portfolio needing to seek other pastures other than China for overseas diversification.

Conclusion

To summarize, the market correction news and fears that you may have seen in MSM (Main Stream Media) recently may have already started when the deflationary forces kicked in !