Clobber Inflation, Grab 7.6% Dividends With These Snubbed Funds

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Another day, another sign the first-level crowd is (wrongly!) losing its head over inflation--and yet another opportunity for us to tap those fears for big dividends!

Let's start with the number the headline-focused crowd can't move past: 6.2%, which is the jump consumer prices took in October 2021, compared to a year earlier.

Inflation Lurches Higher ...

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But something strange is going on here--the stock market doesn't care. While we've been hearing about inflation pretty much all year, the S&P 500 still jumped 25% in 2021. That's because, while the dumb money panicked and sold out at various points during the year, the big institutional players--or the smart money--stayed long, and indeed bought more.

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That's because these pros are looking beyond the CPI to jedi inflation indicators like the 5-year forward inflation expectation rate, an important derivative used by economists and investment bankers.

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This metric measures the 5-year Treasury and 10-year Treasury markets' implied inflation rates, which is where the most direct and largest bets on inflation are made by the world's biggest bond traders (we're talking trillions of dollars here, much bigger than the stock market). Simply put, this tells us exactly how much inflation to expect over the next five years.

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