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Strategies & Market Trends : Heinz Blasnik- Views You Can Use
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To: Perspective who wrote (2155)6/6/2003 4:18:45 PM
From: Wyätt Gwyön  Read Replies (1) of 4904
 
nice "rally" in the shorts in the last couple hours reduced my short losses by 20% from their "all-time high".

Actually, my biggest point is that the USD is depreciating against anything you might want to buy with it - in other words, inflation is chewing away at it's purchasing power, even as the monetary authorities fret over how the deal with the deflationary forces

stated otherwise, you mean there is across-the-board inflation. however, there is no inflation in a lot of goods and services despite Greenspan's best efforts. worse yet, there is especially no inflation in profits. the latter is all that matters as far as stocks are concerned. hence it is a stretch to say that an across-the-board depreciation of fiat currencies--a/k/a "inflation", which hasn't even happened yet--necessarily means there will be inflation in profits.

in other words, you really need to distinguish between the fact that inflation in fiat currencies will drive up the price of gold and perhaps other commodities, and the questionable notion that such inflation will also increase the "value" of equities.

stocks are not "things" like lumber, oil, and gold. they are merely a claim to the profits on the equity portion of corporate property. without increasing profits, nothing can cause equities to sustain increases over the long term except multiple expansion. and multiples have of course already expanded to a ridiculous extent.
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