However, investors must get used to inflation, according to Thomas Peterffy, a billionaire who is the founder and chairman of the online trading platform Interactive Brokers, who spoke with Forbes over video chat. Notably, in January, Peterffy recommended that investors consider keeping 2–3% of their money in cryptocurrencies as a hedge against inflation and the possibility of fiat currencies “going to hell.” However, Peterffy is feeling less confident now as a result of the market collapse and liquidity crisis that has roiled the crypto sector. It’s not that Peterffy has completely given up on digital assets just yet. He maintains his belief that there is a possibility that Bitcoin may become quite valuable in the future. Because of this, he continues to keep some Bitcoin and intends to acquire more if the price reaches $12,000. Currently, Bitcoin is trading at around $21,800, at the time of publication.
Multiple reasons why inflation is not short term
There are multiple reasons why inflation is here to stay, according to the billionaire, including decades of chronic U.S. deficit spending; continued disruption in supply chains as globalization “reverses.” He added there is a dearth of qualified labor and increased automation; corporations’ self-imposed ESG (environmental, social, and governance) regulations that “raise costs of production”; and, ironically, rising interest rates, the same mechanism designed to reduce inflation.
Peterffy doesn’t anticipate double digit hike
The vast majority of market participants anticipate that the Federal Reserve will increase the benchmark interest rate sometime later this month by at least 75 basis points, and maybe even by one full percentage point. The increase in the federal funds rate that took effect one month ago was the highest in the last 28 years. However, Peterffy does not anticipate a recurrence of the 1980s, when then-chairman of the Federal Reserve Paul Volcker raised interest rates to double digits, which resulted in a severe economic downturn but was successful in bringing inflation under control. In spite of his pessimistic forecasts, Peterffy believes that the equities markets in the United States will reach rock bottom as soon as the fall. According to the brokerage pioneer, the S&P 500 might fall to a value as low as 3,000 in October, which would represent a decrease of 21% from its current value of over 3,800. Since reaching a new all-time high in November of last year, the S&P 500 index has already fallen by more than 20%. Peterffy is less focused on investing in specific sectors or industries; instead, investors should target companies that are “investing in their [own] competitiveness during this environment.” Buy stocks now with Interactive Brokers – the most advanced investment platform Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
