Heinz Blasnik- Views You Can Use Message Board

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Strategies & Market Trends : Heinz Blasnik- Views You Can Use

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To: LLCF who wrote (2168)	6/9/2003 1:13:02 PM
From: Perspective	Read Replies (2) of 4904

Over the long haul, the relation to earnings stream gives stocks some inflation-hedge potential. And if you are short them, you can lose as the dollars you produce on the short sale are devalued away. If inflation is 20% but earnings are only growing by 10%, the company may be losing ground, but if you are short it, it should still track the earnings growth (even if it is contraction in real terms) and your short loses money. This assumes constant valuation - which would theoretically get hammered by rising rates - but as long as rates are pinned by AG at zero, the valuation will be pinned where it presently is, near infinity. BC

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