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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Saulamanca who wrote (73502)	3/28/2001 10:34:49 PM
From: brunn	Respond to of 99985

The inflation rate was much higher as well but that argument is rather irrelevant to the question of valuations of stocks vs. fixed income. As a matter of fact, one could interpret higher inflation a reason to be more conservative in your investments. If inflation is 8-10% would I prefer a fixed return of 10% or higher or would I prefer to take a risk with a stock that could go up or go down? On the other hand, if inflation happens to be just 2%, I might be more willing to take on the risk inherent in the stock market in order to improve my return from the 3% C.D. I just cannot see how people can talk about historic valuations and yet ignore interest rates.