Three ways to protect your wealth from 1970s-style stagflation

The forces at work that paved the way for stagflation in the late 1960s and 1970s have very clear parallels today. So how should investors respond? Matthew Lynn suggests three measures to safeguard your wealth until we're ready for another bull market.

Historical comparisons are vital for any serious investor. Not because the past always repeats itself, but because it gives you a sense of what forces are at work and how they are likely to shape events. The tricky bit, however, is deciding which historical parallel is the right one.

In the debate between whether we are looking at a decade of deflation or inflation, for example, too much attention is paid to where we are right now. At the start of the 1970s, there was little to suggest that rising prices were going to be a problem any time soon. Nor was there much sign that mass unemployment lay ahead. But, as a fascinating recent analysis by Morgan Stanley made clear, there were four forces at work in the late 1960s and 1970s that were to pave the way for stagflation rapid inflation combined with zero or minimal growth. All have very clear parallels today.

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Matthew Lynn

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years. 

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.