|The UBS analyst thinks that equities are a good hedge in the 2-6% inflation range, with many conditions. Read the whole post to get the full description.|
Thursday, December 13, 2012
Stocks And Inflation
Zedrohedge has a fantastic post today quoting a UBS study discussing whether or not equities (stocks) are a good hedge against inflation. It's particularly timely as the Fed just launched QE4 yesterday, announcing their plan to buy $500B of Treasuries, continuing to monetize the debt. I highly recommend reading the whole thing including the comments. Many of the comments are excellent and I plan to excerpt the ones I liked the best later. In the meantime, here's the payoff chart for me.
The problem I have with all of this analysis is that historical data, particularly American data, is no longer particularly relevant. This is not America any more, not in any financial, fiscal or legal sense. This is much closer to Peronist Argentina and it's impossible to predict what will come next out of Washington. I would bet on unpredictable spasms of government intervention rather than on some kind of continuation of American economic models. That makes financial planning and prediction very difficult.