How to Beat Inflation… Manward Style

Andy Snyder|March 10, 2021

There’s a new wrinkle on the farm…

Bottle lambs.

As we write, our lambing rate still sits right on target – 200%.

The number would be lower, though, if it were not for some intervention from the state… aka this guy.

It turns out one of our ewes has a bit of an issue. She’s only firing on one cylinder. One of her spigots doesn’t work. As much as they try, her offspring can’t get the pump primed.

At first, she rejected the twins outright. We jumped in and fixed the situation with a big dose of forced togetherness. It worked. But we still must supplement the youngsters with a bottle every six hours or so.

The thoughts traipsing through our head as we walk across a cold, dark pasture each night remind us of a story our mother likes to tell. She was a kindergarten teacher for some 25 years.

On the first day of school, a frustrated new student wondered what we’ve all wondered.

“Who signed me up for this $*#@?” the 6-year-old asked his new teacher.

We wonder what the lad is up to these days. He’s probably the president of the school board.

A Pathetic Parable

Ah… but a bit of schooling is good for us.

We might just learn something.

It takes us to a note we got from a loyal reader last time we mentioned our haphazard flock…

You brought back distant memories of lambing season. I was born on a sheep ranch and spent many cold nights lambing. I enjoyed the honest work ethics, but knew I wanted more so I became a children’s doctor and now retired.

I enjoy your stories – parables are great for learning and teaching real-world examples. I would like to encourage you to write another story. Can you give your readers a lesson they haven’t needed for many years? What is your best advice on how to fight the coming inflation – investment wise. What methods do we employ to keep ahead of the curve, especially those of us who are retired? With all the political unrest and turmoil, I’m concerned that we will be seeing financial problems we have never seen in our lifetime, or expected to see in the USA. – Reader J.S.

Hmmm… let’s think – a parable about inflation and a one-teated sheep? And some real-world advice on how to beat the coming inflation?

The last part’s easy.

We’ve been researching and writing about the situation for nearly 20 years.

But the sheep? Well, let’s be honest… we just like a good meal.

But… yes. We’ve got it!

It’s quite simple. We’ll continue our tale from last week.

The Greedy State

You see, nature doesn’t like our 200% lambing rate. It’s not natural. Just as inflation puts too much money in a land with too few goods… a high reproductive rate puts too many mouths in a realm with too few resources.

In nature, the lambs that get pushed aside by their mothers will not survive. They’ll be dead in days.

It was us, the greedy state, who stepped in to save them.

Everybody must have a fair and equitable start, right?

Some camps would say we should now go to all the other ewes, tax some of their excess milk and give it to the lambs that got a rough start. A little from here… a little from there… everybody will go a bit hungrier, but nobody will die.

For many reasons, that doesn’t work all that well.

First, it’s a lot of work. We’ve got to catch all the little buggers. Some will run. Some will hide.

The smart ones will figure out our routine and purposely stop eating for a bit to temporarily lower their production… only to ramp it back up while we’re gone.

It’s a fine way to do a bit of easy lifting… but like most states, we’re quite lazy when it comes to such things. And besides, if we’re going through the effort, we want to do some heavy lifting.

We don’t want our poor lambs to just survive… We want them to compete with the strongest in the flock.

For that, we turn to artificial means.

Making Milk From Water

We get out our bag of high-fat, high-energy milk replacer, add a bit of water, stir it all up… and watch as the newborns suck it down with one big gulp after the other.

It’s ranching alchemy… making milk from water.

To the accountants who know that more weight on our flock means more dollars on our bottom line, it’s like printing money.

We admit it makes us feel quite good. There’s a perverted power in knowing the lambs can’t survive without us… and our magic concoction.

But what makes us feel good… makes them dependent.

Within days, they’ll abandon their one-teated momma. They won’t need her. They won’t want to bother with the work of getting milk out of her. They’ll instead wait for the man with the bottle.

Soon, they’ll be at the gate each morning… bawling if we show up even a minute after sunrise.

But, you may have noticed, we’re quite busy.

We’ve got other things to do. We don’t have time to hold a bottle in the mouth of this lamb… that lamb… and the others that are yet to come.

So we do the efficient thing… what every other shepherd ends up doing. We hang a 5-gallon bucket on the fence, put a few rubber nipples on it… and let the sheep come as they please.

Oh sure… all the newborns will swing by. Most of the animals drinking won’t need the extra milk.

But we don’t care. It’s stimulus. It makes the entire flock bigger and stronger.

It’s more money in the bank.

And here’s where we finally start to answer the question from J.S.

What happens to the lambs that don’t treat themselves to the free milk? What happens to the sheep stuck in a pen on the other side of the farm?

That, of course, is where trouble comes to town.

Buying Inflation

The message we’ve been spreading about the coming inflation is quite simple. Get in a position where you won’t go hungry.

In much clearer words, own assets that will rise in value as inflation takes hold.

In Manward Letter – our monthly paid stock-picking newsletter – we have the Modern Asset Portfolio. It’s designed to be adjusted as interest rates (and therefore inflation) rise.

Right now, we’re overweight on buyback stocks, tech stocks and, perhaps the biggest inflation buster, cryptocurrency.

We know of no other core portfolio model that calls for such an aggressive allocation to crypto. But we’ve heard from zero readers who regret the stance – not after the year crypto has had.

In the grand scheme of things, owning an asset like crypto is dangerous and super speculative. It is… but when there’s so much free money out there, we ask, where else is it to go?

That’s the critical part… We will continue to adjust our portfolio as inflation takes hold.

As free money dries up, so will our allocation to crypto. We’ll replace it with the right choice for the conditions of the time.

In the next issue, we write about the role emerging markets will have as inflation takes hold… how international exposure plays into things… and what to do with our gold during times of rising interest rates.

The bottom line is simple.

Don’t be the wise, old sheep that sits by the feeder and says, “That stuff is trouble.”

That fella is right, no doubt. But as the flock fattens around him and starts eating the grass he depends on… he’ll go hungry.

Be the wise, old sheep that sees what’s coming… and takes action.

Inflation is coming.

Buy stocks. Buy real estate. And buy crypto.

P.S. Keep the questions and comments coming. Send them to mailbag@manwardpress.com.