Which Inflation Hedges Have Worked?

Plus: Why we expect inflation to decline in 2023; is the stock market still undervalued? [Morningstar](?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_smartinvestor&utm_content=38561&elqTrackId=7ec3c5076b1448fc86f5caf037c4c8da&elq=691c2cc58e2d4674bac8a182119e6920&elqaid=38561&elqat=1&elqCampaignId=18073) [Smart Investor] Smart Investor [Tom Lauricella, chief markets editor]( Twitter: [@LauricellaTom]( [Tom Lauricella] The markets provided us with a spell of relief this past week, with stocks rallying north of 3% after a rough August that had pundits questioning the viability of the bounce from June’s bear market lows. While opinions continue to vary widely about whether stocks have seen the worst of their declines, even those who are optimistic about the outlook agree that we all should keep our seat belts buckled. The big question out there continues to be how much will inflation come down from its highs of the past four decades. The coming week will bring the August Consumer Price Index report, which is expected to show inflation continuing to retreat, but only to levels that a year ago would have been eye-popping. A hotter-than-expected CPI report could unfortunately set the market back again into a new round of volatility. But as we highlight below in our Chart of the Week article, Morningstar’s chief U.S. economist Preston Caldwell is a firm believer in the idea that as we head into 2023, inflation will start to decline faster than many in the markets expect. He’s expecting that between 2023 and 2026 inflation will average just 1.5% - that’s below the Federal Reserve’s 2% target. He has some compelling arguments, so [check out his article](. In the meantime, the historic spike in inflation we’ve all been living through has provided the most significant stress-test for inflation protection investment strategies since the early 1980s. Unfortunately for investors, most investment strategies touted as “inflation proof” haven’t lived up to their reputation. In our featured article this week, [John Rekenthaler looks]( at which inflation have proved their mettle and which ones haven't. The silver lining for investors continues to be that thanks to the bear market, including the August setback, the stock market remains attractively priced. As Morningstar’s strategist Dave Sekera [highlights]( that’s especially the case for stocks that are economically sensitive, where worries about a slowdown have created opportunities for long-term investors. [Which Inflation Hedges Have Worked?]( [Which Inflation Hedges Have Worked?]( We found several winners — and a lot more losers. John Rekenthaler [Read More]( Share: [facebook]( [twitter]( [linkedin]( ADVERTISEMENT [media]( [media] Markets and the Economy [Equities Start Month in Deeply Undervalued Territory After Latest Pullback ]( [Equities Start Month in Deeply Undervalued Territory After Latest Pullback]( We expect sluggish economic growth and low inflation to provide the Fed with enough room to begin loosening monetary policy. David Sekera [2 Stocks for Rising Interest Rates]( [2 Stocks for Rising Interest Rates]( These investment services firms are likely to benefit from higher rates. Susan Dziubinski [Good Reasons to Overhaul Your Portfolio]( [Good Reasons to Overhaul Your Portfolio]( Does your portfolio need a makeover? Here's how to find out. Christine Benz [While Criticizing ESG Investing, Florida, Texas Public Pensions Have Overwhelmingly Supported ESG Resolutions]( [While Criticizing ESG Investing, Florida, Texas Public Pensions Have Overwhelmingly Supported ESG Resolutions]( Florida also supported ESG in 2022 proxy season, analyst says. Leslie Norton Chart of the Week [Why We Expect Inflation to Fall in 2023]( [Why We Expect Inflation to Fall in 2023]( Despite the striking short-term rate, a deeper look at the data suggests less reason for concern around longer-term inflation. Preston Caldwell [Read More]( Share: [facebook]( [twitter]( [linkedin]( Popular This Week [Our Ultimate Stock-Pickers' Top 10 Buys and Sells]( Funds see value in a diverse range of sectors. Ari Felhandler [3 Dividend Stocks for September 2022]( A look at the dividend prospects of three stocks that are popular with income investors. David Harrell [Why Are U.S. Equity-Fund Managers Performing Worse?]( In theory, their odds should be improving. John Rekenthaler [A Better Way to Make Short-Term Bets]( Success requires following a set of rules over a long period. Daniel Sotiroff [Checklist: Exceptions to the 10% Penalty on Pre-Age 59½ Retirement Plan Distributions]( Here is the complete list of exceptions to the 10% penalty. Natalie Choate Listen Now Get the latest investing insights and market updates with [Morningstar’s podcasts]( available on your iPhone, iPad, Android, PC, or smart speaker. Stay connected: [twitter]( [facebook]( [linkedin]( [instagram]( [YouTube]( [Apple News]( [View online]( | [See all newsletters]( | [Share your feedback]( [Unsubscribe]( from this newsletter. Or update your [email preferences](. © 2022 Morningstar, Inc. All Rights Reserved. 22 W. Washington St. Chicago, IL 60602