Hey guys, it's sasha inflation and 2022 is going to get ugly. I know it, you know it. We all know it, but over the last month, russia's invasion of ukraine has meant that the highest inflation rate in over 40 years has been pushed out of the news, and the problem is that inflation has not gone anywhere. It's still here and if anything the last month has just made things a whole lot worse.

Inflation is going to get a heck of a lot higher later this year and if you invest in the stock market, you have a big problem on your hands or maybe just a big decision is inflation about to destroy the value of your portfolio. What should you do to protect yourself? Should you go and redistribute your portfolio, maybe sell stocks and hold cash or hold on to your portfolio like a real trooper? Well, let's discuss exactly what you should or maybe should not do with your stocks in a situation where inflation is running right and by the way, whether you want to hold stocks, buy more stocks at a discount, sell your stocks and hold cash. You can do all of those things without paying any fees with lightyear who are the sponsors of today's video lightyear is the only investing app in the uk where you can invest in the stock market completely for free, unlike other investing apps out there, that charge you Foreign exchange fees for every transaction, you can convert up to 3 000 pounds per month with no fx fees at all and even better. Once you have converted your pounds into dollars.

You can then keep your money on the platform in dollars. So when you sell and buy stocks in the future, you won't have to pay fx fees, even if those transactions are over 3 000 pounds. If you want to try lightyear out, you can use my link in the description to get yourself a 10 bonus when you sign up. So it's not just free, but you get to pick up a 10 extra for just depositing a pound into your account or more and remember the statutory disclaimer.

Your capital is at risk all right. So the latest inflation figures published a couple of weeks ago for february in the us, saw inflation, go up to 7.9 percent and remember that the russian invasion of ukraine only started at the end of february. So these numbers pretty much do not include any of that impact, and there was a lot of impact. Oil was trading at around 91 dollars in a run-up to that invasion and then shot up to well over a hundred dollars.

Opec seemed to be very keen to take advantage as well, so oil prices are trading at a significant premium. As a result, the situation with natural gas is also bad. The price has been continuously going up from around 4.50 to 5.40 about a 20 increase, and this is despite europe heading into the summer season. Now the united states and europe made a lot of noise about banning russian oil and russian gas, and this made for really great news headlines, but the problem is that these bans in practice meant relatively little.

In fact, all they really do mean is that the us and europe are going to pay a lot more for their oil and gas and push their inflation numbers higher. Let me explain. First of all, the bans that the u.s and europe have announced are not necessarily immediate and don't have as big an effect as they should. The u.s banned russian oil from its ports right away, but russian oil only makes up about one percent of the total crude oil processed by u.s refineries, not exactly a big deal.

If you read the uk statements on this, they actually haven't banned russian oil at all. Despite saying that, they have done all they've done is they're going to phase it out gradually over the next year. So today, russian oil is still flowing over. Europe is still currently undecided about exactly what the sanctions should be and how that should be applied with gas.

Europe is so dependent on russian gas that countries like germany don't really know how to solve it. How to go about introducing a ban. So all that's happening right now is that, after all of the posturing and grandstanding those same countries are now still buying oil and gas from russia, except now they are paying 20 more for the privilege and let's say that those countries eventually over the next few months - Maybe over the next year do go ahead and actually fully ban russian oil and gas. What do you think is going to happen, then? Well, pretty simple: russia is going to switch to selling its oil and gas to china, india and everyone else who will happily buy it from them.

Sure it's going to take a change in the logistics. It takes some time to build pipelines to introduce new shipping routes, especially with gas, but if the chinese get involved, those logistics might just get sold. In surprisingly short time scales, so india, china and other countries that are happy to deal with russia will go and buy that russian oil and gas at discounted prices, and then those countries will buy less gas and less oil from other producers who sell it to them. Today, like, for example, the middle east, so capacity is going to open up from those other suppliers and the uk, europe and the rest would just go and buy their oil from saudi arabia at a much higher price than buying it from russia.

Global oil consumption is a zero-sum game, so unfortunately, however, well intended the sanctions are. However, perhaps right they are in the current situation. The likely outcome will just be the west screwing up over their energy costs and very high inflation in the figures for february energy costs. For the u.s cpi were already increasing at a rate of 25.6 per year and specifically items like energy commodities.

Gasoline and fuel oil were up 38 to 44, which is an incredibly high 12-month rate of growth, and this latest increase in price will definitely be a major factor. But if we actually go back and look at what the crude oil price 12 months ago was doing, you will see that in february 2021, oil traded around 57 to 62 dollars a barrel and by june 2021 the price was well over 70 dollars. Pushing to something like a 20 increase, and that is very similar to what we're seeing this year so in terms of the relative growth, those are actually growing at roughly the same rate month of month. So the likelihood is that the energy inflation will jump in march when we see the figures next month in april, but then relatively speaking, not increase, perhaps peter out or even potentially start dropping.

However, counterintuitive that sounds as we head into the summer, despite the incredibly high commodity prices, and then we have the additional concerns about metals. Russia is a very big supplier of a whole bunch of different metals and other commodities too things like wheat, so the combined effect of all of those things affecting supply chains and costs mean that inflation is probably heading to well over 10 percent sooner rather than later. At the fed monetary policy meeting in march, they decided to increase rates by a nominal quarter of a percentage point, but that is going to do very little to quell the inflation spiral. That is already going up at a much faster rate every month and we're now seeing this translate to wages too, which is very worrying.

Rental costs and property prices in the us are already sky high they're continuing to sit at well above the 10 percent growth mark. Since september last year, but shelter prices in the cpi index are still only showing a rate of increase of 4.7. So as this metric filters more and more into the cpi, because shelter tends to have a massive delay on when the real data transforms into cpi data. That is going to really really hurt because shelter is about one-third of the total index.

So the issue is that everyone on youtube is telling you that the high inflation means the worst is inevitable. It is definitely going to happen. We are definitely going to have a market crash. We are definitely going to have a recession.

Stocks are definitely going to collapse in value. Property is definitely going to crash doom and gloom. Cue holding your worried face in your hands and the thumbnail i'm going to make a dedicated video on that particular topic to explain the intricacies that make that situation a whole lot more complex, so watch out for that. But here is the way that i think about investing during this unprecedented inflation spiral.

The money that you invest is money that you are putting to work. It is your money that you are sending out there to earn you more money. The decision that you are continuously making every day is where you want to send your money to work that day. Where is the best place for your money to go work? Do you go and tell it to plow the fields of the stock market, or do you send it to the factory of property, or maybe you put it to hold bonds instead, or maybe you just want to keep the cash as it is just put it away And don't touch it? The fact is you have to put your money somewhere, you can choose to trade commodities and in this environment some people will make an absolute killing on commodities, but it is also a massively unpredictable game.

So, as a long-term investor, i have very little interest. You can choose to keep your money as cash and, if the stock market dips, you will relatively speaking, be winning or you could move into defensive stocks of whichever variety you like as some people advocate. But then again those moves are usually argumented by making a retrorespective case where you go and make that trade in advance of events happening rather than following them. So you could probably have done very well if you went and guessed exactly right if you timed the market exactly right and decided to make that move in november or december last year, but it really does not have the same potency.

In fact, it probably has zero potency now that the stock market has already corrected, and the grey stocks that you might be holding have already been smashed now, if you sell, you may well have to also pay taxes, especially if you've held on to some of the Stocks for a while and got some big gains and you're going to have a bunch of fees to pay, to sell and then move your investments into something else unless, of course, you're using light here in the uk to sell some u.s stocks and then buy some Other u.s stocks, in which case you will not have to pay any fees at all. Remember lightyear is the sponsor of this video, so you'll have to be extra careful with making your investing decisions based on pure impulse if the market doesn't go and nosedive, and instead we see the situation in ukraine, for example, improve in whichever way that may happen. There is every chance that the market will go and rebound despite inflation heading to over 10 and if you're sitting on cash. At that point, any upward move in the stock market is going to be painful.

You might be sitting there going well, the rates are going up, the inflation is going up, everything is going to crash because everyone's telling me and the market will do the exact opposite if you're sitting in commodities that head the other way to the stock market at The same time that might feel even worse, and i try and keep things relatively simple in my head - maybe i'm just too simple as an investor, but the macroeconomic factors and the key indicators that i look at for me today. Do not lead me to believe that we have a strong grounding for a massive incoming recession now sure it might happen, but the numbers for me just do not make that likelihood probable and on balance. The average expected outcome from here for me is that the market will probably grow because on average, in this sort of scenario it will and within that growth, i feel there are some companies today that are particularly well positioned to take advantage and perhaps grow at well. Above the average market rate, as we have been seeing over the last two to three weeks, so unfortunately i don't have a killer trading strategy to sell to you.

I am just holding tight because my logic says that is the right move and, unfortunately again my logic will say that that is the right move in 99 of cases, because the stars really have to align in a particularly bad way for that default strategy. For me to shift, and the current situation is absolutely nowhere near that, if you want to see a different point of view on why you shouldn't be investing in 99 of the stocks out there, please go and check this video right here. If you found this video useful, don't forget to smash the like button for the youtube algorithm and thank you so much for watching i'll see you guys later.