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Will they make up their goldarn #*@^&$# minds! Is inflation good or bad for equities?
06-13-2008, 07:12 PM
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#1
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Recycles dryer sheets
Join Date: Oct 2007
Posts: 332
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Will they make up their goldarn #*@^&$# minds! Is inflation good or bad for equities?
Could somebody help me on this? All the financial planners I have dealt with and most websites I have read say you must have a big dose of stocks to offset the effects of inflation. However, certain others say that inflation destroys value and eats away at real investment returns. I also personally note that a whiff of inflation and the stock market goes down and expectations of inflation makes interest rates rise, which is bad for stocks. Which is it for heavens sake? Or are we talking about very long term effects vs. short term reactions?
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06-13-2008, 07:20 PM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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06-13-2008, 07:33 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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High inflation is universally bad. The question is how do you cope. Stocks, which can theoretically raise prices in inflationary periods, should do better then normal bonds. So its not that stocks will necessarily benefit from high inflation, they are just one of your least bad alternatives.
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06-14-2008, 02:41 AM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Posts: 6,115
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inflation causes values to rise naturally. you may not be ahead in real dollar terms but non the less stock prices will rise generally just from the dollar value falling.
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06-14-2008, 03:54 AM
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#5
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Thinks s/he gets paid by the post
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06-14-2008, 05:16 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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now that says it all!
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06-14-2008, 11:17 AM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Location: Hooverville
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Quote:
Originally Posted by cashflo2u2
I also personally note that a whiff of inflation and the stock market goes down and expectations of inflation makes interest rates rise, which is bad for stocks. Which is it for heavens sake?
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First, try to keep in mind that the stock market is a whimsical creature, intent on making us look like idiots.
Given that, the best overall inflation resistant stock is what WEB calls a "toll booth". Some enterprise that has pricing flexibility, is either strongly desired or needed, for which level of demand is relatively insensitive to price, and which requires little ongoing maintenance capital spending.
Correctly identify a few of these and you troubles are over. In fact, inflation will be your best friend. Other than your faithful doggie, of course.
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
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06-15-2008, 03:05 PM
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#8
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Recycles dryer sheets
Join Date: Oct 2007
Posts: 332
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I'm beginning to get the picture!
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06-15-2008, 05:22 PM
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#9
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Recycles dryer sheets
Join Date: Aug 2007
Posts: 433
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See how easy and foolproof it is. Just put your feet up, lean back and let the money roll in.
There are plenty of stockbrokers that'll show you how to do it too.
__________________
Consult with only myself as your adviser or representative. My thoughts should be construed as investment advice of the highest caliber. Past performance is but a pale shadow and guarantee of even greater results in the future.
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06-15-2008, 05:37 PM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
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06-16-2008, 11:47 AM
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#11
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Thinks s/he gets paid by the post
Join Date: Jul 2006
Location: Denver
Posts: 3,504
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In his "Stocks for the Long Run", Jeremy Seigel has shown that stocks, in the past, have been a good long-term hedge against inflation, but react negatively in the short term.
Its a book worth reading.
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06-16-2008, 11:58 AM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Quote:
Originally Posted by walkinwood
In his "Stocks for the Long Run", Jeremy Seigel has shown that stocks, in the past, have been a good long-term hedge against inflation, but react negatively in the short term.
Its a book worth reading.
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great book......I have an AUTOGRAPHED copy............
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Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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