By Eric Parnell, CFA on February 20, 2025February 20, 2025 <span data-mce-type="bookmark" style="display: inline-block; width: 0px; overflow: hidden; line-height: 0;" class="mce_SELRES_start"></span> Downside Risk and Inflationary Forces: Inflation expectations have reached their highest levels since 2023, with monthly readings consistently exceeding forecasts. Additionally, tariffs and the recovery from California wildfires are expected to contribute to inflationary pressures into 2025. Investment Strategy Amid Rising Inflation: The technology sector, which has led the market since the mid-2010s, may face headwinds in a higher inflation environment. In contrast, sectors such as energy tend to perform better during inflationary periods. Energy Sector’s Inflationary Correlation: Historically, energy stocks have shown a positive correlation with inflation, often outperforming technology stocks during periods of high inflation, as seen in the 1970s and 2022. However, future performance remains uncertain. Diversification and Long-Term Strategy: To manage downside risks and achieve consistent long-term returns, it is essential to maintain diversified portfolios across sectors, asset classes, bonds, and commodities. Great Valley Advisor Group is excited to present the latest episode of our video series featuring our Chief Market Strategist, Eric Parnell, CFA. At under 3-minutes each, these bi-weekly videos are meant to provide concise observations on relevant economic indicators to strengthen your knowledge and understanding of current market trends. Subscribe to the GVA YouTube channel Eric Parnell is solely an investment advisor representative of Great Valley Advisor Group, and not affiliated with LPL Financial. Any opinions or views expressed by Eric Parnell are his own and are not those of LPL Financial. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth may not develop as predicted. LPL Compliance Tracking #: 699437