6 Best Sectors for High-Inflation Markets
- Bryan Cannon, the CEO of Cannon Advisors, believes we’re in a historically unprecedented era.
- In the last century, inflationary periods have all emerged during secular bear markets — until now.
- He discusses the six sectors he’s bullish on and why he’s leaning more toward value stocks.
It’s no secret: The past two years have been a breathtaking era for the global economy.
The stock market catapulted to historically unprecedented heights, while inflation rocketed to its highest levels in the past four decades. But Bryan Cannon, the CEO and chief portfolio strategist at Cannon Advisors, which has $135 million in assets under management, said the market was even more remarkable when one considered the historical inflationary timeline versus secular market trends in the past 100 years.
Over the past century, there have been five other inflationary periods, each lasting an average of about two years, Cannon said. But until now, every single one of the previous inflationary periods occurred during the middle of a secular bear market — while the period investors are facing is the first to materialize during a secular
bull market
, as determined by the long-term rotation between uptrends and downtrends.
Cannon Advisors
“I’m curious if this is the trigger that causes us to go into the next secular
bear market
, or if it’s just a unique outlier situation where the inflation turns out to be somewhat transitory and does pass us by, and then the secular bull market continues on,” Cannon said.
Playing the markets in novel times
During this cycle, Cannon recommended that investors push their portfolios toward value stocks rather than growth stocks.
“When you raise rates, you’re stripping
liquidity
out of the market, and essentially, you’re slowing growth,” he said. “Growth companies that are extremely overvalued, that are growing leaps and bounds, generally speaking in an inflationary environment, those are the companies that are going to get hit the worst.”
But Cannon cautioned against “throwing the…
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