There’s a lot of talk now about where the stock market is going from here and what investments might do well if the stock market does badly. One classic alternative to buying stocks is investing in commodities, which move independently from the stock market and so act as a hedge against stock market losses. But investing in commodities is a completely different ball game than investing in stocks. I understood very little about commodities, so I have been trying to dive in and figure them out.

It's sort of simple, inflation is when prices go up and deflation is when prices go down. The key is what price are we looking at and what time period are we measuring over?

For example, let's say we want to measure the inflation in the price of tricycles. The price history might look like this:

We’ve had the highest inflation since the 1970’s. It’s come down some, but what happens next? The conventional wisdom is that inflation is on its way down and that we’ll have a soft landing, the fed will pivot soon and start cutting interest rates, inflation will drop back to 2%, and the economy will rally from here,

Lots of people are speculating whether we’re headed for a recession. John Hussman notes that historically recessions are not officially called until long after they happen. That means we won’t know until way after the fact when or if a recession happens. We could already be in the beginning of a recession, or we might not have one at all, we won’t know for sure until later.

I’ve been thinking a lot about what’s going to happen to the economy so I can prepare for it. The idea that it’s possible to see at least broadly what might happen is alluring. Generally, the economy behaves the way it has in the past, and it’s safe to assume that whatever has worked well in the past will continue to work well. But there are periods of time that are paradigm shifts where all the old rules go out the window, like the oil crisis of the 1970’s and the Great Depression of the 1930’s. It feels like we are now in one of those paradigm shifts.