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March 8, 2022

Understanding Inflation and Countercyclical Indexing with Cullen Roche

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In this episode, Doug and Greg talk with Cullen Roche, Founder and Chief Investment Officer at Discipline Funds.

Aside from advocating for rebalancing portfolios with low-fee, tax-efficient funds, Cullen also writes about the macroeconomy and investing strategies through his blog, Pragmatic Capitalism. Cullen also advises on the overall impact of inflation in the current market.

Cullen talks with Doug and Greg about inflation, economic cycles, and countercyclical indexing with ETFs.  

Key Takeaways

  • [00:47] - What causes inflation?
  • [03:02] - How COVID impacted the direction of inflation.
  • [07:08] - Bank reserves vs. direct payments to individuals.
  • [09:40] - Has the inflation already peaked?
  • [13:35] - Are inflation and inflation rates correlated?
  • [20:16] - Hyperproductivity in the US economy.
  • [23:31] - How inflation negatively impacts everybody.
  • [26:40] - The midterm elections and market predictions.
  • [34:06] - Cullen’s insights on portfolio allocation.
  • [39:25] - Is global market investing a good idea?
  • [44:12] - What is Discipline Funds ETF?
  • [50:11] - How is Disciplines Fund ETF designed to last long term?


[20:20] - “The thing about deflation is it tends to occur, especially the really traumatic ones, inside of debt bubbles like the housing crisis. The thing that made that so frightening was that you had balance sheets collapsing from debt deflation, and that is really traumatic because it's the exact opposite of money printing — it's money destruction. And that is a very unnatural process inside of any long-term economic period.” - @cullenroche

[38:52] - “A lot of people get in trouble because they get overly confident about potential outcomes and they start saying, ‘Oh, well, hyperinflation is coming, the government's ruining everything, so I need to just own nothing but Bitcoin.’ And those sorts of maximalist positions can be really damaging because if you're wrong, your outcome is asymmetric in a really potentially catastrophic way.” - @cullenroche

[41:59] - “I'm not just an advocate of diversifying globally. I'm actually an advocate of diversifying globally based on what the actual full market capitalization is.” - @cullenroche


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The information in this podcast is educational and general in nature and does not take into consideration the listener’s personal circumstances. Therefore, it is not intended to be a substitute for specific, individualized financial, legal, or tax advice. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a final decision.