- Will stimulus mean inflation?
- Will a strategy based on consistent dividend growth head off inflationary threats?
- This screen hopes so on both counts, but it has been outperforming in the meantime anyway.
I started to run my Inflation Beaters screen nine years ago, which was probably the last time inflation fears were running higher than they are today. Back then, the reason for heightened concern about inflation was very similar to the reason now: stimulus.
There could be an important distinction between today’s stimulus and the post-credit crunch stimulus. After the credit crunch central banks focused on feeding newly-created money into the banking system to repair banks’ balance sheets. Now, governments (especially in the US) are using-newly created money to replenish consumers' bank accounts. This could lead to a rush of spending once lockdowns around the world end. And maybe, that will wake the sleeping ogre of inflation.