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Only because you're talking about a bond with fixed payments. Operating companies (stocks) handle inflation better because they can raise prices.
by cheriot 6y ago
Only because you're talking about a bond with fixed payments. Operating companies (stocks) handle inflation better because they can raise prices.
- coliveira 6y agoBut with companies you're not dealing with interest compounding, you're dealing with a company's growth prospects, which are largely unrelated to interest rates.
- cheriot 6y agoI've not seen a context where people where strict about saying compound interest is exclusive to interest payments. Reinvested dividends and reinvested earnings also compound.
- coliveira 6y agoYou'll have a hard time finding companies that pay decent dividends and at the same time have high growth prospects.
- cinntaile 6y agoHe isn't saying that you'd have both at the same time. He's saying that high company growth is also compounding. And reinvesting dividends is yet another form.
- deleted 6y ago[deleted]