It has been so long for most of us and never for many to consider the impacts of inflation as a driver of investment decisions – but then again, the last two years of the pandemic have accelerated radical and essential changes to business and society (to use an old-fashioned summary phrase).
There are traditional ways we have thought about inflation but many of these are tinctured with models we either grew up with, formally studied or both. The general thought is to divert money into tangible assets or as Elon Musk has advised, “physical things like a home or stock in companies you think make good products.” Warren Buffett in the same article advises investments in revenues generating assets such as great companies that produce products or deliver services and provides jobs.
The Financial Times notes a distinctive shift:
Investors are buying more US farmland in search of a hedge against inflation as commodity shortfalls caused by Russia’s invasion of Ukraine drive world food prices to record highs.
Land values in the Midwest grain belt have gained 25-30 percent in the past year while auctions draw intense bidding for available ground.
FT notes that larger investors, funds, and institutions are not new to this asset class, but the volume of increase is what’s notable, which is driving inflation in the farmland itself, which in some cases has, “outstripped farmland’s earnings potential” which is thought to be offset by the overall value.
Another post on Investopedia, 9 Asset Classes for Protection Against Inflation covers a blend of asset categories that may function as a hedge, including some that may address the impact of devalued currency.