the debt that we all owe. (The idea is, if in 10 years a dollar is worth half what it's worth today, then the debts I owe today will be half as burdensome a decade from now.) With this in mind, I don't want to hold cash... That's a recipe for guaranteed losses. Instead, I'll be focused on owning two things with the bulk of my assets: gold and companies with pricing power. Gold is simple, so I'll focus on the other category. I want to own world-class companies with products or services that are in high enough demand that they'll be able to pass on cost increases with ease and continue generating excellent returns and profits. The most straightforward type of companies are toll-taking businesses that get paid as a percentage of a larger transaction. My favorite among these are the credit-card companies like Visa (V) or American Express (AXP). As inflation rises, you'll need to pay more dollars for the same good, but Visa and Amex will still get their cut. Lastly, the flip side to this is you want to avoid owning businesses without pricing power. Stay away from businesses that employ lots of folks earning minimum wage (those rates are definitely going up) and sell products where pricing is tough to get. Two areas that come to mind for me are restaurants and nursing homes.
Only Own Businesses With Pricing Power (and Gold)
STANSBERRY RESEARCH PORTFOLIO MANAGER AUSTIN ROOT
T he world is more indebted than it has ever been, when you add government, corporate, and individual consumer debt together. Collectively, we owe more than three times the world's gross domestic product (GDP). And each year, debt balances are only going up. But governments and central banks show zero interest in solving this problem the way you or I would – by prudently spending less than they make and paying down debt over time. Instead, it's clear that they want to keep spending big and hope to grow their way out of the problem (if GDP goes up more quickly than debt, then "voila," the debts look smaller by comparison). They also have one additional tool that we don't have: a money-printing press. Over the next decade, expect governments to throttle down even more on monetary stimulus and money supply. Expect currencies around the world to decline in value and inflation to eventually soar. This will artificially reduce the huge global debt burdens by devaluing
With this in mind, I don't want to hold cash... That's a recipe for guaranteed losses.
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December 2019
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