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What assets are losing value because of inflation? I thought cash is the only thing losing due to inflation, and debt is one that wins. I swear the things you
by legolas2412 4y ago
What assets are losing value because of inflation? I thought cash is the only thing losing due to inflation, and debt is one that wins.
I swear the things you read about macroeconomics is all just contradicting each other.
- bryanlarsen 4y agoThe stock market has a fairly direct reverse correlation with interest rates. So when interest rates go up, the stock market goes down. The p/e ratio is a measure of earnings per dollar of capital. If you invert it to the e/p ratio you can directly compare to interest rates. So a 5% interest rate is comparable to a p/e ratio of 20. So when the interest rates goes up, the "natural" p/e ratio for stocks goes down, thus deflating the stock market.
- ClumsyPilot 4y agoIsn't that because using leverage to buy stocks becomes more expensive? I think the OP was talking about real assets like houses, land, cars, etc. Those don't go down in value