John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: John Pitera who wrote (6123)	5/18/2002 8:22:53 PM
From: John Pitera	Read Replies (1) of 33421

I recently was asked if inflation could be bullish for the stockmarket, I'm working on my answer. Here's the first draft. Generally speaking inflation is not bullish for equities is the short answer. That is the conventional wisdom, and it's basically true. It can be bullish in terms of retaining purchasing power rather than keeping your money in cash or long dated-bonds, in a very inflationary environment, such as the 1970's. Argentina devalued their peso this past year. It had been pegged to the US dollar. It fell to about 3 pesos to a dollar and at one point had stabilized with a 50% decline against the USD. The Argentine stockmarket doubled in local currency terms because of the devaluation of the currency. so if you look at the argentine stockmarket average and do not consider the currency and inflation rates this past year, it doubled and was the best performing global stockmarket. On a Inflation and currency unadjusted basis this is the shorter version. I'm expecting to get a question back on this. John

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