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Why do the rich care about inflation? Isn't the point that they own all the cash flows?
by stefan_ 4y ago
Why do the rich care about inflation? Isn't the point that they own all the cash flows?
- arcticbull 4y agoMost rich folks aren't rich from holding dollars, they're exposed (to your point) to equity. Higher expected inflation usually means higher future nominal interest rates, and a higher future cost of capital. The DCF model used to value that equity means they get put through the ringer in exactly the way you're seeing paying out in the stock market right now.
- avidiax 4y agoIf a company gets a loan while interest rates are low, then does a stock buyback with cash on hand, isn't it the same as using the loan money?