Key insights
- The post discusses the complex relationship between inflation and stock performance, questioning whether inflation benefits companies like Coca-Cola by increasing revenue or if rising costs offset gains. It touches on the idea that controlled inflation can devalue debt and increase the value of assets, potentially driving long-term stock growth. However, the overall impact on stocks is unclear, with the author seeking clarification on whether inflation ultimately helps or hurts stocks long term. The impact is slightly negative as inflation erodes purchasing power and increases input costs.
My background isn’t in stocks. But I think I invest well in my indexes and blue chip stocks. I’ve learned a lot since I started investing.
But there’s something I can quite wrap my head around, and that’s how stocks react to inflation.
Especially prudent since we all expect inflation to get worse this year.
But as far as inflation and stocks go… wouldn’t that HELP many of them?
Like take Coke a Cola. If the price of a 2 liter bottle goes up 10%, would their earnings go up 10% as well? Or is it a wash because ingredients and shipping also go up?
I would ASSUME the latter. But I’ve also read that inflation (in a controlled non Trump way) is a long term driver of stock growth. By devaluing debt and like owning more valuable assets (jet engines factory at GE)
Either way I just can’t wrap my head around it in a way that makes sense.
Does inflation help or hurt stocks long term?