Walmart (WMT)

Walmart store in south San Francisco bay area
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Bridgewater owns more than five million shares of retail giant Walmart, representing about 3.8% of its portfolio, making it the hedge fund’s fifth-largest holding.

While inflation stinks for consumers, having a stake in a company that places emphasis on “everyday low prices” for goods they can’t do without isn’t a bad position to be in as an investor.

Sure, Walmart is itself paying more for goods and struggling with the same supply chain issues all retailers are. But the discount gorilla is in a perfect position to take market share away from competitors as consumers flock to their aggressively low prices.

In the most recent quarter, Walmart’s U.S. same-store sales — a key measure of a retailer’s health — increased an impressive 9.2%.

Shares of Walmart are down 5% over the past three months, giving contrarian investors something to think about.

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Pepsico (PEP)

Cans of Pepsi with water drops on black table
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Almost 2.7 million Pepsico shares take up space in the Bridgewater portfolio, accounting for 2.2% of the fund.

A Pepsico play puts investors on the right side of higher priced consumer staples. In the most recent quarter, the beverage and snack giant posted solid double-digit sales on volume growth as well as price increases.

While main rival Coca-Cola is also a fine way to play defense (Ray Dalio owns it, as well), Pepsico’s broad product offering is a more diversified way to battle against higher prices.

In addition to a sprawling selection of popular colas, juices, sports drinks and bottled waters, Pepsico is all over the salty snack market. Lay’s, Fritos, Smartfood Popcorn, Doritos and Chitos are all theirs. The company also owns the Quaker line of cereals, rice snacks and baking mixes.

Good luck finding many households in America that don’t have at least one Pepsi product in them.

Pepsico shares are up 12% in 2021 and trade at $162 apiece. If that’s too steep, you can always use a popular investing app to buy fractions of shares with as much money as you are willing to spend.

Johnson & Johnson (JNJ)

Johnson & Johnson Inc. logo at the Markham office building.
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If you purchased Johnson & Johnson because of the company’s COVID-19 vaccine, here’s hoping you haven’t already offloaded it to go chasing high-flying momentum stocks.

Bridgewater still owns 2.75 million shares of J&J, representing 2.4% of the hedge fund’s portfolio.

J&J isn’t just a drug maker.

Like Pepsico, Johnson & Johnson boasts consumer staples found in any U.S. home: skin care products like Neutrogena, pain medications Tylenol and Motrin, Listerine, Band-Aids, and more.

In fact, Johnson & Johnson recently announced plans to spin off its consumer health segment into a separate company in order to unlock value. Once the split is complete, investors will be given shares in both companies and, in turn, receive dividend payments from both stocks.

That makes J&J a particularly timely and attractive inflation play.

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A real hedge against inflation

rear view of younga caucasian woman stading in an art gallery in front of two large colorful paintings
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When inflation is raging, stocks aren’t always an investor’s best friend.

Opting for more tangible assets can sometimes better preserve the value of an investment.

If real assets are more your speed, it might be time to dip into the contemporary art market, which has outperformed the S&P 500 by an impressive 174% since 1995.

Don’t worry. You won’t have to rent a tux and outbid a roomful of millionaires.

A popular investing platform helps you purchase shares in modern masterpieces, allowing you to secure a stake in rapidly appreciating works by Banksy, Monet and even Andy Warhol.

You won’t have them on your wall, but you will have them in your portfolio, where they can be just as pretty.

Fine art as an investment

Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.

That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.

On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.

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About the Author

Clayton Jarvis

Clayton Jarvis

Reporter

Clayton Jarvis is a mortgage reporter at MoneyWise. Prior to joining the MoneyWise team, Clay wrote for and edited a variety of real estate publications, including Canadian Real Estate Wealth, Real Estate Professional, Mortgage Broker News, Canadian Mortgage Professional, and Mortgage Professional America.

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