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Lots of people have recommended stocks, but if market are efficient, it should not be possible to predict the excess returns of stocks or bonds over cash using
by Bostonian 5y ago
Lots of people have recommended stocks, but if market are efficient, it should not be possible to predict the excess returns of stocks or bonds over cash using public information such as the current level of inflation.
- radford-neal 5y agoIt's true that the price of stocks should already reflect that there may, or may not, be high inflation in the future. But if you're worried about the risk of high inflation, switching to stocks from cash could make sense, even it does not increase your expected return. On the other hand, though stocks represent real assets that should be a protection against inflation, their value is also highly related to general economic conditions, which typically are rather poor when high inflation is causing general chaos. So it's unclear...
- arisAlexis 5y agoThe profit comes from just holding stuff that generates value and not by buying something belownits intrinsic value