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‘Possible Inflation Rise, But It Will Not Be a Catastrophe’

Michael Burry, the man who predicted the subprime mortgage crisis, famous worldwide thanks to Christian Bale’s interpretation of “The Big Short”, has no doubts. According to him, we are on the verge of an inflationary period, which would bring a world down on its knees due to the ongoing sanitary emergency. Burry announced on Twitter the arrival of a wave of hyperinflation as not seen since the Weimar Republic, capable of disturbing the world economy. Gabriele Blei, CEO of Azimut Holding, one of the world’s largest players in asset management, shares his insights.

Blei’s opinion on Michael Burry’s prediction

The rise in inflation will be greater than that estimated by the central banks, but Weimar’s conditions are very different to affirm that the risk is of hyperinflation. Nowadays, central banks have many instruments to intervene and lately they have been shown to be able to do so in a timely and proactive way to support and elevate the economy and support the social fabric. All the major central bankers have recently declared that they closely monitor the inflationary situation and are prepared to avoid excesses or bubbles, as in the real estate sector or in the stock markets.

Consequences on the saver’s money

In the unlikely event that this would occur, the result would inevitably be a drastic impoverishment (in real terms, of course) of the entire population. The wealth most affected would be that represented by bonds, while real assets, such as real estate and precious metals, or representative of real assets, such as stocks, could be less impacted.

Recommended strategy

Increase shareholding and investments in the real economy (which also reduces the correlation with short-term fluctuations). The listed securities are the worst asset in the event of inflation, even if moderate. It is essential to have a well diversified portfolio both by asset class and geographic exposure. For some time now, it has been pursuing, also through exposure to products that invest in the real economy, accessible to retail investors, the need to revise asset allocation in order to generate positive returns in the medium and long term.

In February 2021 alone, Azimut Holding reported recording positive organic net inflows of € 462 million, bringing net inflows since the beginning of the year to € 1.1 billion. The total assets currently managed by the Italian company are estimated at € 69.9 billion.

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