constantnormal

Equities vs. Inflation

<sigh>

Roger, as a "professional" money manager and investor, you of all people ought to realize that inflation occurs across all sorts of economic backdrops. A mild inflation is not at all detrimental to stocks, so long as it stays low, keeping price changes low and predictable, as that implies plenty of liquidity in a economy strong enough to make use of it. Even a moderate rate of inflation can be accommodated in a strong economy, for a while.

But if you crank of the rate of inflation, to where it becomes difficult for businesses to manage the monthly changes in raw materials and wages, then it's not so good for businesses. Stocks don;t do so well then.

Or if the economy is flat on its back, weak as a kitten, then you get stagflation, with constantly rising costs an companies struggling to turn a profit. Stocks don't do so well then either.

So what kind of inflation do you see (eventually) coming, from all the trillions the Fed is pumping into the money supply, hmmmm?

And how strong is the economy likely to be, in the face of record unemployment and record home foreclosures?