Investing during inflation: you can pay attention to this

Many investors lose money and are worried, says Geert Schaaij of Beursgenoten. He understands the concern, but has some golden tips.

Schaaij: “The American central banks have created a monster that can no longer be controlled. Inflation has now been given free rein. The European Central Bank (ECB) in particular has seriously underestimated inflation and intervened too late to keep interest rates controllable. Interest rate cuts are not over. It is also clear what consequences this will have for the shares, because investors are leaving the market en masse for now. Rightly so.”

Schaaij has a right to speak: he has been warning subscribers of Beursmates for over a year to swim close to shore with investments. Barely four weeks ago, he warned that the stock market could fall sharply, which has now happened. In 2018, he wrote the bestseller The Wolf Chases Your Money, which also predicted the current scenario. 

Global recession

The high inflation figures that we are seeing now will worry the central bank, believes Schaaij. That, he says, only reinforces the higher interest rates.

“Inflation is broader and more stubborn than many thought and central banks will have to act decisively to bring inflation down. We live in the most chaotic, hard-to-predict macroeconomic times of recent decades. All the ingredients for a global recession are on the table.” Fellows has put together a special that can be downloaded for free for those who want to know how to limit recession damage.

Minimize damage

But can an investor limit the damage or make a splash? Schaaij: “That is certainly possible. I understand that it is not fun to see the value of a portfolio fall. But simply selling shares without any strategy is not smart. And buying additional shares means wanting to buy right away. It is a matter of keeping a cool head, moving the beacons and navigating.”

Schaaij continues: “It has been proven, not only in the last 50 years, but for centuries, that the fall on the stock market, the fall in your portfolio, is negligible and that together we reach higher prices, higher peaks. After rain comes sunshine and the graph of the stock market proves that.”

Right timing

The question is: when should you hit the accelerator to make a lot of money? “We understand that stocks look cheap and analyst recommendations include a lot of high price targets. An analyst needs numbers to adjust his or her valuation model, which can put them behind individual stocks. Stock exchange peers are quicker to react, but be patient. The better.com ipo is found online. As long as the stock market is in this phase, you save money. It is better to jump on a moving train than to get on too early.”

He continues: “When the labor market settles down and governments start talking about stimulus or measures to stimulate the economy that is weakening, that’s the time to turn around and expand. We naturally hope to recognize that moment in time. We have been calling for a year: keep swimming close to the shore – and I hope that I will be the first to say: full throttle ahead.”

Asset manager

Schaaij: “There are also subscribers of Beursgenoots who follow us in order to stay connected with what kind of positions they have in their portfolio with an asset manager. That’s smart. Trust in your asset manager is good, but control is better. For example, I recently spoke to a lady who told me that she spent six years with an asset manager in Het Gooi, where she paid almost 12% in costs, while the return was ultimately almost nothing. That’s frustrating. Our motto is: we invest together. It is precisely in these times that we want to be there for the investor.”