| Editor's Note: Inflation might be down compared with 2022 highs. But at 6.4%, it's still dealing pain to consumers. That's why, in today's guest editorial, our friend Marc Lichtenfeld is showing investors where they should invest for solid returns in today's inflationary market. Plus, he's also letting readers in on something special. Marc is showing investors how one simple indicator preceded some of the biggest moves in the market - even in 2022! Everything you need to know is right here. - Ryan Fitzwater, Associate Publisher
Marc Lichtenfeld, Chief Income Strategist, The Oxford Club Inflation may be slowing down, but no one is celebrating. At 6.4%, it remains nearly twice the historical average. Yet despite higher prices, Americans aren't showing any signs of slowing their spending. In January, food away from home prices rose by more than 8%. Airfare went up nearly 26%. Those are discretionary expenses, more or less. If higher prices are not putting people off, chances are inflation is here to stay for at least a little while longer. There's an asset class that has absolutely crushed inflation every decade for nearly a century. And I bet you'll be surprised when you find out what it is. It is not gold. Gold has kept up with inflation over the very long term, but that's about it. An ounce of gold essentially buys the same amount of goods and services today as it did a millennium or two ago. The big inflation beater is small cap stocks. You can see from the chart above that small caps strongly outpaced inflation in every decade. The smallest margin was 4.7% in the 1980s. On average, small caps returned 13% annually, while inflation averaged 3.2% - meaning small caps increased an investor's buying power by an astounding 10% per year. That doesn't just mean you could have had 10% more money each year. It means you could have bought 10% more goods and services each year - no matter how high prices rose during that year. | 
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