I believe we are living through a great national devaluation.
Your money is worth less than ever before. Your labor is worth less. Your health and well-being are worth less.
And the promises made to you over the years? The ones from employers... corporate America... and the U.S. government... are very likely not worth anything at all.
That begs the question... Why even bother investing in this "great devaluation?"
After all, if the U.S. dollar is in decline, inflation is ticking up again, and our country's broken social contract is making life more difficult every day, won't that drive stocks lower?
Not at all.
You have to think about where value comes from...
Take Coca-Cola (KO), a business everyone knows. While the company doesn't disclose the exact number, it spends something like $0.30 to produce a can of Coke. It then sells the can for twice that in the wholesale market to retailers.
Later, consumers pay about $1 to $2 for a can at retail, depending on where they buy it and if they buy it in bulk.
But the point is... The company produces a good at one price, and wholesalers and consumers value it at another. The difference is a creation in value.
And businesses only survive when they create said value.
Now, if inflation worsens and the dollar gets further devalued, there's still no reason to expect value creation to decline... It just means it'll take more dollars to buy the same can of Coke.
In other words, the dollar price of that value will only increase.
That leads to an obvious conclusion: Owning the stocks of value-creating businesses is one of the best ways to protect yourself from the great devaluation.
In short, a business that can raise prices on its customers to maintain its margin will always be value-creating. And the value of that business will soar as the dollar declines.
But there's more...
As the future gets less certain, investors will want real businesses with a competitive "moat" to fend off rivals.
Value – as an investing strategy – will come back. Commodities and hard assets will come back. Dividends and income will come back, too, big time.
You'll want to own businesses that are in heavy industries, that provide medical innovations, or that offer assets that can't be replaced by any other competitors... And you'll want these companies to pay growing dividends.
Fortunately, because of government interference, dividends are likely to keep rising...
For a few decades now, companies have favored stock buybacks over dividends because of the tax treatment. If a firm wanted to return $1 billion to shareholders, doing it as a dividend would lead to income taxes for shareholders. But using that money to buy shares and retire them was tax-free.
However, as part of the Inflation Reduction Act of 2022, Congress enacted a 1% excise tax on all share repurchases. Now, when a company buys back shares, it owes a check to Uncle Sam. So, many companies will opt to pass those taxes on to shareholders in the form of dividends rather than repurchasing shares and being responsible for the bill.
Thanks to these tax changes, we believe firms will prioritize dividends in their capital plans. As such, we're projecting higher dividend-growth rates for the future than we had previously.
Of course, just because a company pays a decent dividend doesn't mean it's a smart investment. You need to find high-quality companies that pay good dividends. This is where I can help you...
I recently went on camera to talk all about the great devaluation, what's coming for the market, and the best income plays I'm recommending for my subscribers. If you haven't seen my presentation yet, click here to check it out.
What We're Reading...
- Something different: Cameron Young wins elusive first PGA Tour title at Wyndham.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
August 6, 2025