Anyone hesitant to buy now?

[GeoPoto]

For the past several years, the Federal Reserve (and many of its international equivalents) has pursued a policy of increasing the availability of dollars by purchasing bonds and holding them on its balance sheet. The justification for the policy is that the enhanced liquidity will spur economic activity and job creation and there is little enough inflation that "real" economic activity will increase.

The fed's accommodative policy was holding its own (the economy was booming and inflation remained constrained) when the pandemic hit. In response to the economic collapse triggered by the pandemic, the Fed has felt compelled to "double down" on the purchase of financial assets, thereby injecting even more dollars into the financial system.

The rush of dollars provided by the Fed has pushed stocks and bonds to historical highs even as the economy has staggered, with several sectors facing existential challenges. Gold is rising and the dollar is falling, both classic advance indicators of impending inflation.

One view would be that purchasing collectables, particularly high-end items with active (liquid) markets, is a logical use of investable capital in expectation of higher (possibly much higher) rates of inflation in the near future combined with stagnant stock and bond markets.

Collectables are similar to gold -- a relatively fixed supply with a reliable hold on people's fascination. Selling stocks and bonds at historically high levels and purchasing collectables could be a prudent "hedge" strategy for a portion of a large investment portfolio.