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OPTO Sessions James Davolos explores the inflation ETF, dollar debasement and predictive attributes

James Davolos is a portfolio manager at New York-based investment advisory firm Horizon Kinetics. The firm manages more than $6.6bn and has been an established industry presence for more than two decades.

Davolos has been at the firm for 16 years since joining Horizon Kinetics’ trading desk in 2005. During this time, he has worked his way up the ranks and he now manages the firm’s Kinetic Internet Fund as well as several private and institutional accounts.

 

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Davolos is also the co-portfolio manager of the firm’s Horizon Kinetics Inflation Beneficiaries ETF [INFL], which was one of the main topics of conversations in this week’s podcast episode.

“From a top-down level, people should recognise that we are at the tail end of what is probably a 30-plus-year cycle of disinflation. [There] has been over 30 years of central bank and government policy that has favoured capital over labour, primarily through record money supply growth, and keeping interest rates extremely low,” Davolos told Opto Sessions.

“That has favoured capital and that has been disinflationary, as has been a variety of different factors in terms of technological innovation and globalisation.”

“That has favoured capital and that has been disinflationary, as has been a variety of different factors in terms of technological innovation and globalisation”

 

Davolos explains, however, that he thinks there has been a “slow burning fire” that has been shifting this trend dating back to the financial crisis.

“Although bankers have kept rates extremely low and they’ve kept inflation rates extremely low, COVID-19 and the global response to the pandemic has really accelerated this dramatically to the point where we think we’re at a multigenerational secular shift away from disinflation, away from capital being favoured, and into reflation and, ultimately, inflation and the prioritisation of labour over capital worldwide,” Davolos stated.

“Although bankers have kept rates extremely low and they’ve kept inflation rates extremely low, COVID-19 and the global response to the pandemic has really accelerated this dramatically to the point where we think we’re at a multigenerational secular shift away from disinflation, away from capital being favoured, and into reflation and, ultimately, inflation and the prioritisation of labour over capital worldwide”

 

He explains that as he believes those making the rules are the debtors — that is to say the US, the UK and the EU and other major central banks — that “there’s a very strong case for inflation today.”

 

To find out more from Davolos, including how his firm’s product, the Horizon Kinetics Inflation Beneficiaries ETF, plans to capitalise on this environment, listen to the full episode on Opto Sessions.

 

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Listen to the full interview and explore our past episodes on Opto Sessions.

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