Bank of America Tells Stock Investors to Get ‘Real’ as Inflation Makes Its Comeback

‘Buy humiliation and sell hubris,’ says Michael Hartnett

by Sue Chang
Market Watch

Inflation is making a comeback and it’s time investors start thinking about hedging against its corrosive effect on assets and against the monetary policy tightening that’s likely to accompany bubbling price risk, a Bank of America Merrill Lynch strategist said Monday.

The best approach? “Buy humiliation, sell hubris,” said Michael Hartnett, chief investment strategist at Bank of America.

He predicted inflationary pressure will build as central banks begin to scale back policy support. Ahead of that reversal, investors should rotate out of stocks and bonds to “real” assets, given their positive correlation with inflation.

“Today the humiliation is very clearly commodities, while the hubris resides in fixed-income markets,” Hartnett said.

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