Portfolio Perspectives – Pilot
Sean Hanlon, the founder of Hanlon Investment Management and Vestbridge, discusses the effect inflation has on those planning for or living in retirement as well as the latest trend in investing, direct indexing.
Key Takeaways
- Retirees feeling inflation pain should scrutinize major purchases like homes (new home sales dropped 50% from 1M to 500K units annually) and instead focus on controlling expenses rather than making large financial moves
- Savers and near-retirees with 5-10 years until retirement should maintain their sound asset allocation strategy—no major changes needed as fixed income now offers better returns and stock valuations have normalized
- Direct indexing allows you to own individual stocks (e.g., 100 of the S&P 500's 500 stocks) with nearly identical index performance while eliminating ETF/mutual fund fees and enabling personalized tax loss harvesting and ESG preferences
- Inflation expectations have cooled significantly (down from 6.3% one-year forward in March to 3% recently), suggesting the inflation spike is behind us and stagflation is unlikely as inventory buildup normalizes
- Interest rates likely peaked around 3-3.5% on 10-year Treasuries and are unlikely to rise significantly higher due to long-term deflationary forces (technology, aging demographics, global debt) that remain structural headwinds
Sean Hanlon, the founder of Hanlon Investment Management and Vestbridge, discusses the effect inflation has on those planning for or living in retirement as well as the latest trend in investing, direct indexing.
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