Building Wealth The prices you pay at the grocery store have dropped for nine straight months...
Bloomberg reports that it's the longest streak of U.S. food deflation since 1960, with one exception: when the financial crisis was winding down in 2009...
An analyst at institutional-research firm Wolfe Research who has studied grocery prices for more than a decade wrote that he had "never seen deflation this sharp."
Eggs and beef are two of the biggest decliners...
According to the Bureau of Labor Statistics, the index for meats, poultry, fish, and eggs has declined 12 months in a row – and is down 6.5% from this time last year.
Raw ground beef fell nearly 9%, frozen fish and milk are each down 5%, and coffee is down about 4%. Also, eggs are down 38%... though if you recall, last year around this time we were going through the bird-flu scare that drove prices up.
This is a powerful motivation for the Federal Reserve to keep interest rates low for longer than many folks expect.
We've had low inflation for 25 years, and extremely low inflation for the last five. That makes it easier for retirees to live off their savings... as long as they don't get burned with the search for safe yield.
We're currently in the midst of the second-longest bull market in history. But most investors are still scared right now.
Remember what happens in a bubble... Greed takes control of investors. They forget about safety and value. They plow their money into the opportunities they think have the biggest payoffs. They can't let a hot investment get past them.
That's what happened with tech stocks during the dot-com boom. And with houses in the 2006 boom.
That's not happening now in stocks.
Some folks are still so afraid of stocks that they are buying U.S. Treasury securities at extraordinarily low yields. That's a terrible decision.
Even worse are the people buying German, Swiss, and Japanese bonds at negative yields. I don't know about you... but I'm not investing in anything that's guaranteed to lose me money.
The point is, investors are not going bubble-wild. They're trying to go super-safe. And bull markets don't end until investors bid up prices too far and speculate on a future unlikely to ever happen.
That's not to say that we won't see corrections in the coming months. We never try to predict such things.
No matter what happens in the market, our investing strategy remains consistent. We strive to buy companies that produce things that consumers want... or better yet... need.
For example, in my latest Income Intelligence issue, we detailed a quality company that turns brands into booming businesses. And we can buy it without any concern for whatever the economy or the Federal Reserve might do in the coming months. If you're an Income Intelligence subscriber, you can read my latest full issue here.
And if you're not, I'm confident that our Income Portfolio... currently averaging a yield of more than 5%... will give you safe, consistent income throughout your retirement. If you could use some more income in your investments, click here to learn more about subscribing.
What We're Reading...
- Something different: How to create the perfect apple.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Retirement Millionaire Daily Research Team
October 10, 2016