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Why would you not expect stocks to increase with inflation? Most of the time, stocks have far outpaced inflation for several decades now.
by usefulcat 5y ago
Why would you not expect stocks to increase with inflation? Most of the time, stocks have far outpaced inflation for several decades now.
- efdee 5y agoIf they increase, it's despite of inflation - not with inflation. Simplified example: the value of most stock companies depends on their projected gains in the next few years. A projected gain of $X in 5 years will devaluate over time as inflation increases, simply because $X in 5 years time will be worth considerably less than $X today. As inflation rises above a healthy 2-3%, it hurts the actual gains and thus the connected stock. You can counter such things by keeping interests low (as they've been doing for a while now) but that party has to end someday.