Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
“Hi James, I am a subscriber. I read your weekend report with much interest. Just a little confused with regard to : 5 – Keep it simple stupid (KISS).Look to stocks / sectors that have performed well during previous periods of inflation: 1 – Real Estate assuming low debt levels. Surely with rising bond yields this could hurt real estate? Are you referring to certain type/s of real estate?” – Thanks Joel T.
Morning Joel,
Real Estate should rise in value in line with inflation until ultimately interest rates move up too high putting subsequent pressure on prices. Hence companies long real estate without mountains of debt should fare well because they will enjoy the asset price inflation. The chart below shows exactly this in the early 1970’s when inflation hit the Australian economy before indeed prices levelled off as rates rose
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