The Inflation Guide for the Perplexed.

The headlines say inflation is back, and yet our President repeated his call to lower interest rates. That’s like seeing a wall ahead and screaming to the driver, “Hit the gas!” Eh?!

(Originally I wrote WTF?! but then crossed it out and went with Eh?!—a concession to social grace. Mild confusion just feels classier than existential panic.)

After spending few minutes in the state of perplexion, I sketched three possibilities:

  1. Perhaps our leader genuinely doesn’t understand that inflation feeds on excess money the way bacteria feasts on sugar. But that assumption clashes with the fact that Trump is a businessman—and presumably not new to the concept of economic cause and effect.
  2. Perhaps he did understand it in his younger days… but forgot that somewhere between golf holes.
  3. Or—wild card—he’s playing 4D chess at a level so profound even the ghost of Milton Friedman is failing to grasp it.

I sincerely hope it’s the third option. But as we know, while hope is a good thing—it’s a bad financial strategy.

Those managing their portfolios actively probably shifted into inflation defense ages ago, when it smelled like policy was going to hit the fan. But if you waited till now, well… welcome to the afterparty. The big money already scooped up gold and TIPS, driving their prices skyward and leaving bonds curled up in the fetal position.

But the general public? Well, it is distracted and lulled by a stock market rally inflated by cheap money and rampant FOMO. It’s the kind of rally that looks great on the surface—like a party where the music’s pumping and no one notices the foundation cracking beneath the dance floor.

Therefore because most of general public has not reacted yet, even if you’re late, a modest pivot toward inflation defense still makes sense—especially if Trump’s 4D chess playing turns out to be less Kasparov, and more chessboard-on-fire.

I gave the above paragraphs to Grok 4 to chew on. Grok is a very serious guy – I don’t think he has sense of humor but he is smarter than I. Grok told me that the option three with 4D chess is the likeliest. Eh?! In Grok’s opinion Trump’s demand to lower interest rates is a strategy to juice up economy now to get past the midterm elections. But if Trump gets what he demands, Grok says, inflation will accelerate and cause a more severe crash down the line. And I think it is likely Trump will get what he demands by installing a “shadow” Fed chair.

So that brings us back to the real question: what should those who are only now waking up to the reality of rising inflation actually do? If I had to shift into an inflation defense position at this late stage—after big money has already poured into gold and TIPS, and dumped bonds —here’s how I’d approach it. This isn’t financial advice, but a glimpse into how I’d structure the shift.

High Level Portfolio Allocations:

  • Precious Metals: 14% (Gold 8%, Silver 6%)
  • Stocks: 24%
  • Treasuries: 30%
  • REITs: 14%
  • TIPS: 9%
  • CHF: 3% (Swiss Frank.)
  • JPY: 2%   (Japanese Yen)
  • Cash: 4%

And here is the detailed portfolio structure:

  • Precious Metals (14%):
    • Gold (8%): GLD, physical gold, GDX.
    • Silver (6%): SLV, physical silver, SIL.
  • Stocks (24%):
    • Small-Caps (5.75%): IWM, QBTS, RGTI.
    • Large-Cap Growth (7.25%): QQQ, NVDA, MSFT.
    • Defensive Sectors (7.25%): Staples (2.4%, PG, KO), Utilities (2.4%, DUK, SO), Healthcare (2.4%, JNJ, PFE).
    • Dividend Stocks (3.75%): VYM, JPM, VZ.
  • Treasuries (30%):
    • Short-Term 1–3 Years (15%): SHY, 2-year notes.
    • Medium-Term 5–10 Years (12%): IEF, 7–10-year notes.
    • Long-Term 20+ Years (3%): TLT, 30-year bonds.
  • REITs (14%):
    • Healthcare (7.5%): WELL, VTR, XLV.
    • Infrastructure (4.5%): AMT, DLR, IFRA.
    • Residential (2%): AVB, EQR, REZ.
  • TIPS (9%):
    • Short-Term 1–5 Years (5.4%): STIP, 2–5-year TIPS.
    • Medium-Term 5–10 Years (3.6%): TIP, 5–10-year TIPS.
  • Swiss Franc (3%): FXF, direct currency.
  • Japanese Yen (2%): FXY, direct currency.
  • Cash (4%): JPST, money market funds.

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By laughandgrowrich_v5xnmz

Hi, I’m Zakhary—a big picture enthusiast, market misstep survivor, and chart dissector. I built this space to learn out loud, laugh and shriek while riding the volatility rollercoaster, and search hidden order in the chaos

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