Inflation, Deflation and Stock Performance

Filed under: Major Movement, Forecasts, Newsletters, S and P 500, DJIA, Recession

"While traditionally many investors worry about the potential effects of runaway inflation on stock prices, lately others worry more about the potential effects of deflation, a falling price level," observes Mark Salzinger.

"There's certainly plenty of common sense behind worries that either deflation or significant inflation would be bad for equity prices, but does the history of stock prices agree?" asks the editor of No-Load Fund Investor.

"We believe that for the next year or two, likely low demand for loans and considerable slack in employment and capacity utilization greatly limit the possibility of rapidly increasing inflation. The odds of deflation are higher, but still not high.

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Inflation, Deflation and Stock Performance originally appeared on BloggingStocks on Sat, 04 Sep 2010 12:40:00 EST. Please see our terms for use of feeds.

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