 Hey everyone, this is Dan. I want to talk about how to invest in an inflationary environment. The inflation rate as measured by the consumer price index has gone up to 7% year over year in December of 2021. It is the highest it has ever been since 1982. Our investment strategies that have worked well in the past might not work anymore in an environment of high inflation. To find the best investment strategies, I decided to analyze data from the last 36 years, and I came to some very interesting conclusions. I like to tell you what I found. Let's get into the details. First of all, I'd like to mention that I'm not a financial advisor. I share my stocks trading strategies and analyses for entertainment and educational purposes only. If you want to trade stocks, you should make your own decisions, and you should definitely consult with your financial advisors before you do so. Let's continue. We have a lot to cover. The Bureau of Labor Statistics announced that over the last 12 months, the CPI increased to 7% year over year, and that's the information published on January 12th, 2022. If you plot the CPI since 1986, you can see we are at the level that's higher than any of the previous years. Actually, we have to go all the way back to 1982 on this chart to see a point higher than the current level of 7%. Definitely, we are in a very inflationary environment. Here we are. To try and decide the best investment strategies in this environment, I decided to perform the following analysis. First, I list the CPI number for each year from 1985 to 2021. That's 36 years of data, month to month. And then I list the year to year percentage increase of stock for those years. And I pay 25 leading stocks in various sectors, including the energy sector, finance, semiconductor materials, healthcare utilities, consumer discretionary and consumer stable. I also listed the S&P 500 and NASDAQ 100 indices for comparison purposes. Then I select the years with the highest CPI numbers. And then for those years with the highest CPI numbers, I identify stocks with the greatest increases year over year. If you like what you're seeing so far, I'd like to encourage you to click the like, subscribe and notification button. That'll enable you to receive notification when I post my next video. It'll also encourage me to make more videos like this in the future. Thank you very much. Let's continue. This is a corner of the spreadsheet that I built. These are the stocks. These are the increases from year to year. And this is what I found. Out of the 36 years, if I set the threshold to be CPI 2.7 or above, I found 17 years that fulfilled the condition out of 36 years. And these are the years. As I rank the returns of the 25 stocks, I got this list. The stock with the highest return is Microsoft, averaging 33.2% annual return out of the 17 years. Notice that out of all 36 years, Microsoft averaged 30.1% annual return, which is very impressive. But notice that for those high inflationary years, Microsoft actually performed better. And definitely Microsoft performance was better than the S&P 500 and better than the NASDAQ 100. And both S&P and NASDAQ were positive during those years. The next one down is Nike and then Applied Materials, Home Depot, Micron Technology, Intel, ConocoPhillips, ExxonMobil, etc. Then if I raise the bar a little bit and set the CPI threshold to 3.2, then I found 10 years out of 36 years. And this is the ranking. Notice that Microsoft is still on the top. Raise the bar yet again. To set the CPI at 4 or above, I found 5 years out of 36 years. And these are the years. And this is the ranking. From these 3 tables, I see a recurring theme. For example, Microsoft is on top of the list pretty much in all 3 tables. Next to that, Nike ranks pretty high also. Then Applied Materials looks pretty good. Home Depot and ConocoPhillips looks pretty good as well. Based on these findings, what are my strategies? Definitely I will be buying Microsoft, Nike, Home Depot, Applied Materials, and ConocoPhillips at the right time. And I will explain what the right time is. I will buy stocks that are similar to the above stocks such as Google, Amazon, Facebook, Apple, AMD, ASML, NVIDIA, TSM, that's Taiwan Semiconductor, ExxonMobil, and Lowe's. Why? Because the Google stock doesn't go all the way back to 1985. So there was no way for me to include Google or Alphabet in my analysis. However, if you look at the last 5 years, since 2016, the stock price of Alphabet Google is very well correlated with Microsoft with 0.9667 correlation. Likewise, Apple has very high correlation with Microsoft as well as Facebook and Amazon. That's why all these stocks will be my potential purchase candidates in a high inflationary environment. And then to look at stocks that are similar to Applied Materials, which is a semiconductor company, I found AMD, NVIDIA, ASML, and TSM with high correlation with Applied Materials. And Lowe's has high correlation with Home Depot. Since the market has been heading down the last few weeks, this is not exactly the right time to buy a lot of stocks. I will wait for the market to turn bullish before I buy or I will nibble the above stocks. I will not buy a lot, but I will buy a small number of shares at this point, especially when S&P is already down more than 6-7% from its peak. So the market might be turning bullish soon and that's why it will be a good time to start nibbling at this point. But definitely I will buy a lot more when I see definitive signs that the market is turning bullish again. I will in general buy when the price rebounds from a critical support level or breaks above the resistance level or when positive news developed for a company and I will generally sell when the price pulls back from a critical resistance level or drops below a critical support level or when adverse news develops with regard to a particular company. I'll be definitely mindful of the broad market conditions and I'll update my Twitter subscribers continually almost on a daily basis about any news that developed or some of my trades. Now what if there's a market correction? We might be heading towards a market correction now because S&P as I mentioned is already down more than 6-7% from its previous peak. A market correction is usually defined as the condition when the S&P 500 is down 10% or more. When that happens I will instead of following the strategies I outlined in the previous page, which are for a bullish market, I will use the strategies I've outlined in my market crash videos. I posted about two or three market crash videos in the last year. You can find them in my YouTube channel. This is the latest one I posted. That was on September 28th. If the market continues to go down in the next few days I'll most likely post another market crash analysis video. If I do that I'll be using the same graphics so look for this picture although the words might be a little bit different and I'll most likely use the word market crash but the subtitle will be a little bit different. So look for that in my channel in the next few days if the market continues to go down. At this point I'd like to remind you to subscribe to my Twitter account which is DanMarketL with the Twitter account I've been trying to provide my subscribers with more timely updates. Again if you like what you've seen I'd like to encourage you to click the like, subscribe and notification button. As usual I will very much welcome your comments, questions and suggestions. This about wraps up my video for now. I will chat with you again in the next few days. In the meanwhile I'd like to wish you the best of luck with your financial investments.