Who's afraid of the Inflation Wolf of Wall Street?

Insights, Perspectives 2021
15.09.2021 by David Souccar Reading time: 2 minute(s)

This would of course have important consequences for the equity markets. During the inflationary period in the 1970s, multiples contracted as nominal rates increased, and the relative performance between the haves (businesses that could protect against inflation) and the have nots widened.

Having been in Brazil at the time when peak inflation reached 3,000 percent per year, I have witnessed the misery it brings. Yet I don’t pay much attention to the prophets of inflation doom. It won’t surprise me if by year-end, some of them will cry “deflation wolf”.

Wall Street talking heads are currently recommending that investors pile into cyclical stocks. In some ways, it makes sense: banks make more money lending at higher rates and energy companies do, too, when the price of oil goes higher. In the short term, inflation will be a tailwind for cyclical companies, and for those who believe they can time the market, we agree that the so-called reflationary trade still has life left in it.

However, if you take a long-term view, the reflationary trade is a reflexive reaction, in my opinion. Ultimately, what matters for stock appreciation is real, not nominal earnings growth.

Quality is the silver bullet

In a scenario of high inflation, at a minimum, investors should consider companies that can protect against it. It is even better if you can invest in companies that can actually thrive under inflation, such as those that have one or more of the following characteristics:

  1. A unique product/service that customers rely on or cannot switch to a cheaper version,
  2. revenues that are linked to inflation, and
  3. scale and market leadership to influence prices. Inflation or not, those are the businesses we think investors should focus on.

Generally, investors should beware of long-term investment decisions based on short-term headline news. We understand that it is hard to go against the crowd. Today, inflation is the center of attention, but economic cycles come and go, as do the scaremongers. Shifting tactics to low-quality cyclicals might work for a time, but ultimately stock prices tend to follow earnings and we think a portfolio of quality growth stocks can stack the odds in your favor.



Wealth Management – actively managing your assets

You entrust us with the management of your assets, benefiting from our extensive investment expertise.

Learn more

Vontobel Volt® – your app solution for thematic investing

Select up to 14 megatrends according to your convictions – risk-monitored and actively managed by our experts.

To Vontobel Volt®



derinet – guiding you through the world of structured products

derinet will help you find your way through the world of structured products. Take a look at our comprehensive product range.

Learn more



Let our experts advise you without any obligation.

After sending the form you will receive an email asking you to confirm your email address.


  • Legal notice

    The data transmitted to Vontobel using this form are sent encrypted via the Internet. However, the possibility of unauthorized third parties accessing the transmitted data, particularly using malware on the computer, cannot fully be excluded. If you are using this form to send confidential data (e.g. your account number), you accept the risk of disclosure of your banking relationship and bank account information to third parties and you release Vontobel from any and all liability for damages incurred as a result of the use of this form, to the extent that such release is permitted by the law.

    By providing your phone number and/or email address, you declare your express consent to Vontobel contacting you by phone and/or unsecured email. The personal data provided by you are used and stored to handle and process your inquiry and in order for us to perform our contractual duties in connection with the services chosen by you. The personal data may be processed on behalf of Vontobel by a subcontractor engaged by Vontobel, including outside your own or Vontobel’s location. Your personal data are processed and stored for the duration of our business relationship. In addition, we are subject to a number of duties to retain and document. Finally, the duration of storage is also determined by the statutory limitation periods.

    Please note that the use of email and electronic means of communication involves significant risks, such as lack of confidentiality, possible manipulation of contents or sender, dispatch to the wrong recipient, viruses, etc. Vontobel does not accept any responsibility for damages in connection with the use of emails and electronic means of communication. Vontobel therefore also recommends that you do not send sensitive information by email, that received text is not included in responses and that the email address is newly entered manually each time.

    Vontobel does not accept orders for commercial transactions such as the opening of accounts, payment or stock market orders, cancellations of orders or authorizations, blocking of credit cards, changes of address etc. via this form. Please contact your branch or your relationship manager with regard to such transactions.

    The information and/or documents offered on this website represent marketing material pursuant to Art. 68 of the Swiss FinSA and are provided for information purposes only. On request, further documents such as the basic information sheet or the prospectus are available free of charge whenever you wish. The products, services, information, and/or documents offered on this website may not be accessible to individuals domiciled in certain countries. Please note the applicable sales restrictions of the respective products or services.

    Not all products are available in all countries.

    Bank Vontobel AG
    General Counsel
    Gotthardstrasse 43
    CH-8022 Zürich

    Terms and Conditions of Use
    Privacy Policy



Mandatory information



Stay up to date with our newsletter “Impact on Investors”

After submitting you will receive an email with a confirmation link.



Mandatory information