M1 money supply

Inflation is caused by the excessive amount of currency in circulation. From this perspective, the most intuitive indicator is M1 (money supply in narrow sense ). M1 includes cash in circulation and deposits of non-financial companies, which are money that may enter the circulation field at any time. M1 data is regularly published by the Central Bank and can be obtained by any investor through multiple channels. M1 is measured based on its growth rate. The Calculation Method of M1 growth rate is very simple. You only need to use the M1 of the current month to directly compare with the M1 of the previous month. According to our analysis in recent decades, the growth rate of M1 between 10% and 20% is normal. When the growth rate of M1 is lower than 10%, it usually shows a strong pressure of deflation; when M1 grew above 20%, the pressure on inflation began to emerge.

I have made statistics. If I buy equity assets when the growth rate of M1 is close to or below 10%, I will sell them when the growth rate of M1 is higher than 20%. If the configuration of equity assets is composed of indexes similar to the deep finger, or directly invest in index-based funds, the income from 1996 to the present should be about 90 times.