SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Pastimes : Clown-Free Zone... sorry, no clowns allowed
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Perspective who wrote (244274)6/7/2003 12:30:03 AM
From: Simba  Read Replies (1) of 436258
 
Bobcor,

Dollar devaluation must ultimately result in high rates of inflation and does that not mean future earnings in this currency for these companies are discounted at a higher rate and therefore the present value of the company will fall together with the dollar. So why should stock prices climb to compensate for the declining dollar ? Unless the earnings also go up at the same rate as the hyper inflation rate, in which case the stock price can be expected to climb to compensate for the "new" dollar level.

Another way of looking at it is by looking at P/E. Assuming that the PE remains the same level, if E is measured in dollar unless it increases the price in the same dollar units will remain the same. Sure in GOLD or EUR the E is decreasing but so will the price in GOLD or EUR units. In hyperinflation scenarios, the PE's are expected to reduce due to the large discount rates for the future.

Simba
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News