With the rise of inflation in the past few years, many investors have been paying attention to metrics that they largely ignored for decades. Measures like the CPI and PCE have now become front page news when they are released each month. But despite quoting them all the time, many investors don't understand what goes into them and how they are calculated. In this episode, we try to correct that. We take a deep dive into the metrics that are used to measure inflation and the details behind them. We cover the CPI, PCE and the behind-the-scenes metrics like owner's equivalent rent that go into their calculation. We also look at more real time metrics like Truflation and look at what it all means from both an investing and financial planning perspective.

#inflation #cpi #macro

00:00 - Intro
02:45 - Inflation's return to the investing radar
05:54 - Inflation is personal
09:05 - The composition of the CPI basket
12:55 - The inflation rate of the individual CPI components
16:29 - The different ways to calculate the rate of inflation
20:30 - How shelter inflation and owner's equivalent rent are calculated
26:43 - CPI inflation vs. home prices over time
31:26 - The differences between CPI and PCE
34:15 - Housing drives the long-term difference between CPI and PCE
34:37 - The Cleveland Fed Nowcast, Truflation and real time inflation measures
40:13 - Should inflation impact a long-term investment strategy?
48:14 - Thinking about inflation directionally rather than exactly
52:10 - The relationship between inflation and the performance of value stocks
55:25 - How inflation impacts the financial planning process

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