Microsoft (MSFT)

Microsoft Azure
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One of Microsoft’s greatest defenses against inflation is an enormous user base that depends on the company’s tech for both personal and business uses.

Check out these recent numbers: 54 million Microsoft 365 subscribers; 250 million Microsoft Teams users, 1.3 billion Windows 10 users. These tend to be highly invested customers who aren’t likely to flee to other companies in the face of modest price hikes.

The same can be said for Microsoft’s growing list of Azure clients. The company’s cloud technology is just too central to many businesses for them to shy away from higher prices.

(If you’re going through a budget crunch of your own right now, remember that you can always keep up the momentum by investing with just your “spare change.”)

The cloud has been a game-changer for Microsoft. In the first quarter of fiscal 2022, cloud sales rose by 36% year-over-year. They were a major factor in the company’s overall revenue growing by 22%.

Microsoft’s stock price is up a whopping 51% this year.

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Apple (AAPL)

Apple store
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Microsoft may have a dedicated user base, but Apple benefits from customer loyalty that can border on obsession. That’s great news for inflation-era investors.

Apple’s customers have never balked at paying high prices for premium phones, laptops or watches, and their insatiable appetite for the company’s devices has made it the world’s biggest tech company in terms of revenue.

A mountain of capital and a willingness to innovate should allow Apple to keep evolving and providing long-term value. The company’s plans to reimagine the iPad and get into the electric vehicle market could open significant new revenue streams.

When those streams start flowing, it’ll be icing on an already sweet cake. Apple’s fourth quarter, which wrapped up in September, saw revenue shoot up 29% to $83.4 billion.

Apple’s stock has risen 21% this year.

Amazon (AMZN)

Amazon delivery
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How can stock in a retailer be a hedge against inflation? When that retailer is Amazon, the calculation changes a little.

Amazon remains a go-to option for online shoppers looking to save money. The wide selection of products on offer creates competition between retailers, which keeps prices in check — and people returning to the site.

Like Microsoft, Amazon is relying more and more on its cloud-computing division to drive profits, which makes the company a strong long-term play. In the third quarter alone, revenue generated by Amazon Web Services hit $16.1 billion, a 39% increase over Q3 2020.

With a single share worth more than $3,500, Amazon might not normally be your first choice as a hedge. But you can still get a piece of the company using a popular app that allows you to buy fractions of shares with as much money as you are willing to spend.

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A real alternative to the stock market

Andy Warhol gallery
Sergei Bachlakov / Shutterstock

The main reason Siegel is keeping his money in the stock market is because of his belief that there are no better alternatives to owning stock when inflation is raging.

"Even with a little bit of bumpiness in stocks, you have to be wanting to hold real assets in this scenario. And stocks are real assets," he says.

But stocks aren’t the only real assets out there; so are collectibles. And contemporary art, which has outperformed the S&P 500 almost every year since 1995, is a particularly intriguing option.

Normally buying works by Banksy or Andy Warhol is reserved for people who are already fabulously wealthy.

However, a new platform allows you to purchase shares in rapidly appreciating modern masterpieces without having to spend millions of dollars.

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.

Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.

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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