The Best Stocks To Buy To Fight Inflation

You can fight inflation with a more diversified portfolio. Below we discuss some of the best stocks to buy for that purpose. 

What Is Inflation?

t is the increase in the prices of goods and services, reducing the buying power of the US dollar or any other currency.  

Inflation Lowers Stock Market Return

Besides affecting the profitability of companies, inflation broadly affects the stock market. Most research suggests that high inflation causes low real returns for stocks. 

Value Stocks Usually Perform Better

Next, inflation tends to punish riskier assets. Riskier usually means growth stocks in the stock market, while value stocks are on the other end of the risk spectrum.  

High Cash Flows  

On the other hand, value stocks usually have high cash flows and, in many cases, pricing power. As a result, they can raise prices to counter high input costs caused by inflation. 

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