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06 August 2021
04:11 hour

Arent signs of inflation indications that the economy is recovering, thus leading to the stock market to just go up and up? why then do i hear people explain that inflation causes the stock market to go down?

Reddit Stock Market

11/04/2021 - 00:24

From my understanding, increasing rates of inflation are signs that the economy is recovering. interest rates have an inverse relationship to inflation. higher rates of inflation results in lower interest rates and vice versa. with how the economy is right now, everyone is expecting signs of increasing rates of inflation as expected by the fed pumping more and more money into the economy (stimulus checks, etc). because of this, people are more willing to spend their money on products that businesses create, thus leading businesses to make even more money, leading them to create even more products which leads to a positive loop that just keeps on going up. if businesses do good, their stocks generally tend to go up. and since higher inflation rates leads to lower interest rates, the act of borrowing money increases which causes even more money to get spent on products and in stocks. because of this process, shouldnt higher inflation rates just cause the stock market to continue to go up? why do people say that the stock market will decrease due to higher inflation rates if my above explanation makes sense? i understand that things will generally be more expensive and that the dollar will decrease in value but wouldnt investing in the stock market (say S&P500) generally results in higher returns vs inflation? or is just 'some' inflation good and we just have not reached 'astronomical' rates of inflation yet that would be bad for the economy/stocks? if you take a look at the history of interest and inflation rates, we are much more on the lower side vs what we were decades ago? hope my question makes sense, thanks for any help i can get!!   submitted by   /u/whitecat69 [link]   [comments]


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  35. Inflation and the S&P 500, which way is up? (07/03/2021 - Reddit Stocks)
    Historically stocks have been considered a partial hedge against inflation. So with inflation on the horizon I thought it would be interesting to discuss the effects of inflation on the price of the S&P 500. Can we actually expect to see inflation rise? The argument for inflation is pretty straight forward. Over the last few months we have seen an increase in government stimulus, with another $1.9 trillion added today. Meanwhile the pandemic has decreased spending. With the end to the pandemic coming into view this means that we could be looking at a near future where a population newly flush with cash all run out to buy things they have been putting off buying. In this scenario demand outpaces supply driving demand-pull inflation. This sentiment has been endorsed by the fed who generally believed to be a good sign for the economy. So it does seem likely that we will see an increase in inflation. Though it's just a prediction, and we all know how those usually turn out. What effect will rising inflation have on the price of the S&P 500? With rising inflation, buying power decreases. This means companies pay more to produce goods while consumer purchasing decreases due to lost buying power. Meanwhile bond yields tend to increase pulling money away from stocks. On the surface this seems like an open and shut case for inflation driving lower market returns. So then why are stocks traditionally considered a hedge against inflation? The usual answer for this seems to be that companies balance sheets typically increase in proportion to inflation. Moreover the whole driving force for demand-pull inflation is increased demand resulting in companies raising prices and ultimately resulting in increased profits. So inflation is good for stock prices then? Didn't we all just agree it's bad? The truth, like so many things in the market, seems to be that the effect of inflation on the market is inconsistent and depends on a great many more factors than just inflation itself. So reddit, what's your take? What factors do you think will influence the current pro-inflation market and what do you see as the outcome? As always, I am not a financial advisor, and this is not financial advice.   submitted by   /u/xsist [link]   [comments]
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  36. I Didn't Look at My Portfolio Today (13/05/2021 - Reddit Stocks)
    I did not look at my portfolio today and do not have the inclination to look for a while. I got stopped out of my speculative plays during the first two months of the year then moved to more conservative stocks and ETFs. I am pretty confident in my current positions. Some positions will go red. Maybe they all will. But over the long run quality wins out. I have cash to buy if I find something selling for a large discount. I think there is a pretty good chance we will see a market slump that lasts into summer. People will likely freak out about inflation. The experts can explain inflation is transient, brought on by supply chain problems, labor shortages from people unwilling to work, whatever, but people will believe their own anecdotal experiences combined with an unease with the consequences of politicians giving out free money to anyone with a pulse. I just got off the phone with my parents. They just returned from a grocery run to "stock up before prices increase." It looks like toilet paper hoarding all over again, and this will cause further prices increases that are already being driven by supply shortages. That sort of pessimism is not good for the market. On the plus side there is a really good chance we will see some great buying opportunities. Buy the dip does not mean buy when the market goes down 2% for the day; it means buy when the stock significantly declines, usually over a course of weeks or months. Some of the growth stocks that were trading at obscene valuations may become attractive. Looks like hunting season just opened, boys.   submitted by   /u/TrioxinTwoFortyFive [link]   [comments]
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  37. Stocks for inflation/ raised rates (14/07/2021 - Reddit Stocks)
    What stocks do you guys think we should look into if inflation is more than transitory and the fed raises rates sooner? Here a my picks: $JPM: JPMorgan is stock piling cash so they can loan it out when rates are higher, effectively setting themselves up to do good when the fed raises rates. Their dividend is 2.31% with a P/E of 12 $AVB: Avalon bay is a real-estate play. They focus on apartment buildings in developing areas, so in economy crash they won’t be having empty commercial buildings, and they will make more money with inflation as rent prices go up. Any debt they have will vanish with inflation. Their dividend is 2.87% with a P/E of 39(high) $MCD: McDonald’s is one of the biggest real estate company’s out there, so their property value would only go up in case of inflation. 47% of their stock price comes from operations over seas, so that would protect against the fed, where 44% of share price comes from US operations. Dividend is 2.18% with a P/E of 34 $WBA(Walgreens): Shipping prices are already going through the roof and company’s haven’t even started passing along trucking, container and cargo plane price increases. People will be shopping and buying tooth paste, and other necessities from Walgreens instead of ordering online. Market cap is $40 billion and they have $16 billion in debt that will vanish away with inflation. Their dividend is 3.95% with a P/E of 17. Let me know your picks and why!   submitted by   /u/Giorno-Giovanno [link]   [comments]
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  38. Treasury Yield at 1.48(?) and why that's important? (25/02/2021 - Reddit Stocks)
    So, I'm new to this like most people, right? Got in at December, I've had insane growths through luck but I have an abhorrent lack of fundamentals. Just recently saw this thing about the treasury yield and why it's high, how that's important, and how that can influence the market and I don't think I"m able to relate everything. So, what I've gotten is that the yield will rise when inflation or recovery occurs. In today's situation, inflation and recovery are both on the table which is why it's being driven up so high atm. I don't understand why that's negative for the stock market and growth stocks in particular. Wouldn't it be better to invest in stocks when there's inflation and wouldn't it be better for stocks if there was a higher rate of economic recovery?   submitted by   /u/The_Start_Line [link]   [comments]
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  39. Mark Hulbert: Is inflation going higher or lower? We checked with the model that has the best record (09/06/2021 - Market Watch)
    Thursday's inflation report for May has major implications for the stock market.
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  40. Market Extra: Stock markets outside the U.S. could beat inflation even at 1970s levels, says Citigroup (07/06/2021 - Market Watch)
    Investors weighing stocks as a way to beat inflation may want to look beyond the U.S. market, according to analysts at Citigroup.
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  41. Inflation and the stock market - too much fear in the past week!! (06/03/2021 - Reddit Stock Market)
    These are just some thoughts and I am not an economics professional but I think I understand some things. Government bonds are usually fixed rate titles. For existing bonds out there, in order that interest rates rise, bond prices need to go down. This happens when bonds are oversold. Of course at some point the effective interest rate will go higher when the nominal price of the bond declines. Bond prices decline when too many people go e.g. into stocks and leave bonds behind. But it's not like inflation comes because of that. From my understanding this is just a phenomena because capital is allocated elsewhere. Of course the capital injected into the economy by the governments will have to go somewhere. In my opinion, people will invest money or spend money. Prices will go up because people will spend more once the economies are re-opened back to normal. But this will most likely be a one-time effect. Stock markets decline, only if the governments decide to issue new bonds with higher interest rates (please say if that already happened, but to my knowledge, only the effective interest rate of already existing bonds has changed so far). Therefore, only when governments set higher interest rates when inflation accelerates over a longer time period will stock markets decline massively. Not price explosion due to much money chasing basic needs like e.g. vacations etc. The reactions past week on the interest rate news were just too much from what I can tell. Still, a 1.5% interest rate is nothing. There are still stocks out there with solid business models and moderate growth rates and a 5% dividend return. You still have a historic p.a. return in the stock market of 6%. Simple example: You want $60,000 as passive income a year. At a 6% interest rate (taxes ignored), you have to invest $1,000,000. You have to invest $4,000,000 in bonds at 1.5% interest to get $60,000 p.a. return. So stock markets are still much more attractive just by investing in high dividend stocks or simple index ETFs. And if you are a stock picker like me: there are still so many possibilities out there at the moment...it's incredible! So people need to calm their tits and go to the stock market until interest rates and inflation go up much higher and will remain so for a longer time. Anything else is just noise at the moment. Correct me if I am wrong! Have a nice weekend everybody!   submitted by   /u/Stonkstrader84 [link]   [comments]
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  42. What is a publicly traded company that is analogous to Aldi? (30/06/2021 - Reddit Stocks)
    I have a personal opinion/belief that the inflation we’re seeing is not transitory and that the Fed is in a self created trap with the inability to raise rates in any meaningful way. Food price inflation plus any slowdown in the economy post helicopter money should mean lots of shoppers head down market into discount grocers. We’ve already seen this play out with the rise of the dollar stores over the past several years. I would love to be able to invest in Aldi right now as I think they’re very well positioned for an inflationary market but they’re a private company. I’d love to hear if there are other public discount grocery plays, or private label/generic food companies you think are poised to do well in this market.   submitted by   /u/AppealPuzzled6845 [link]   [comments]
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  43. Best avenues to weather the inflation/bear market scare (20/06/2021 - Reddit Stocks)
    While we continue to hear more and more bearish sentiment from the media and government alike, what do you believe is the best avenue to hedge against inflation or the inevitable bear market? It is ignorant to say anyone knows when we’ll see the consequences of the pandemic. It may be a drastic occurrence or a slow growing hit. Regardless of when it may or may not happen what are your plans to protect yourself for a bearish future?   submitted by   /u/Paco_Libre [link]   [comments]
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  44. Weekly Stock Market Forecast (10/04/2021 - INO.com)
    This week we have a stock market forecast for the week of 4/11/21 from our friend Bo Yoder of the Market Forecasting Academy. Be sure to leave a comment and let us know what you think! The S&P 500 (SPY) The understanding that the Federal Reserve will stop trying to fight and rather accept inflation […] The post Weekly Stock Market Forecast appeared first on INO.com Trader's Blog.
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  45. Inverse ETFs (16/02/2021 - Reddit Stocks)
    I’m fairly new to the stock market (around 4 months). Ever since I began investing I hear people saying the “market is gonna crash” or “the bubble is going to burst” which is pretty worrying obviously. Though, yesterday I found an inverse S&P 500 stock called SPXU. This stock basically rises when S&P 500 goes down. I was thinking would this be a smart way to get “insurance” if the market ever crashes again? Appreciate any information or opinions. Thanks!   submitted by   /u/soccer-starrr [link]   [comments]
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  46. Key Words: Stock market can ‘more than compensate’ even if inflation hits 20%, says Jeremy Siegel (14/05/2021 - Market Watch)
    History shows “stocks more than compensate for inflation,” says Wharton finance professor Jeremy Siegel. And he expects U.S. inflation to run quite hot.
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  47. Key Words: Stock market can ‘more than compensate’ even if inflation hits 20%, says Jeremy Siegel (14/05/2021 - Market Watch)
    History shows “stocks more than compensate for inflation,” says Wharton finance professor Jeremy Siegel. And he expects U.S. inflation to run quite hot.
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  48. Market Extra: Here’s why the bond market shrugged off a surge in U.S. inflation (13/04/2021 - Market Watch)
    The lack of a bearish response to a U.s. inflation surge in March could reflect how markets were already anticipating inflation measures to tick up in the spring of 2021.
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  49. Market Extra: Here’s why the bond market shrugged off a surge in U.S. inflation (13/04/2021 - Market Watch)
    The lack of a bearish response to a U.s. inflation surge in March could reflect how markets were already anticipating inflation measures to tick up in the spring of 2021.
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