Inflation expectations. Inflation hits different companies differently. Companies with a strong brand and a strong moat, ones that basically define their cate

Inflation expectations. Inflation hits different companies differently. Companies with a strong brand and a strong moat, ones that basically define their categories, can raise prices as much as they want. Companies that produce an undifferentiated commodity product get undercut by competitors when they try to raise prices. People buy a Tesla because they want a Tesla. Any old car will not do - the typical Tesla buyer is not considering a Toyota or a Subaru or even a Leaf. (They also tend to be fairly high-earning, and in a profession where they can capture much of the increased prices from inflation.) When more money goes into the economy, Tesla's buyers capture a good fraction of it, and then Tesla can raise their prices to match. Nobody shops at Walmart because it's Walmart. They shop at Walmart because Walmart has the lowest prices. Now, Walmart is being undercut by Amazon (whose stock is rising as they steal business away from Walmart). If there's inflation, will Walmart be able to raise prices? Probably not by very much, because if they do, Amazon holds their current prices and Walmart loses even more business to them. It's the same story for Apple, which has roughly doubled in the last 4 months. Did the value of Apple double in the last 4 month?. Certainly not in real terms. But in nominal terms - probably. I could easily see a future where prices in general are double today in 5-10 years, and the price of an iPhone is likely to rise to keep pace. During the 1970s, prices rose by roughly 10x on average, though the impact was widely disparate on different professions. (At the beginning of the decade, my mom - a teacher - was make maybe 20-30% less than her engineer/lawyer/academic friends. At the end of it, they were making about 3x what she was.) If anything, the market may be understating the effect of inflation on certain company's earnings, perhaps because a lot of people don't believe we're going to get inflation.