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Monday, December 10, 2018
How does inflation affect the stock market? Hey Taylor - How does inflation affect the stock market? I’ve always wondered about that and get hesitant to buy stocks because I don’t know if interest rates are Taylor Kovar about to go up and whether or not that should change my tactic. - Olan
show that the best real returns come when inflation is sitting between 2-3 percent. This doesn’t mean you should buy in excess when inflation is holding steady, but rather you should avoid panicking when it goes up or down a little bit. It always takes a bit for the economy to adjust and get back on track after a period of high inflation. This also usually leads to more volatility in the stock market, so it might be worth waiting to see if the Fed makes a move and then watching the market’s reaction.
Hey Olan - This one is a doozy. I’ve read a lot of studies relating to inflation and the stock market, and I’ve heard so many different theories as to whether inflation is good or bad for investors. I guess the short answer to your question is that there is no short answer. However, here are some notable factors that can at least shed a little light on the issue.
3. Play it safe when inflation is high. While you might see someone hit it rich during a time of high inflation, returns are historically lower during those periods. I don’t think you need to avoid the stock market when the rates go up, but it’s probably not the right time to go hog-wild. Look at trends and keep an eye out for stocks that seem undervalued, but don’t start overcorrecting and making too many moves when there’s increased inflation.
1. Inflation tends to hurt growth stocks more. Since inflation drives down the value of the dollar, it typically hurts growing companies a little more than established businesses. If you own stock in a small tech company that needs to spend money in order to grow, a weakened dollar isn’t going to help you out. Meanwhile, when you own value stocks that are slowly ticking up in price, inflation can actually help you out in some cases. In theory, owning stocks in the long term is a safeguard against inflation, since you can expect a good company’s revenue to go up along with the inflation rate.
This is a solid question, Olan, and I’m glad you’re being this thoughtful with your investing. One of the smartest things an investor can do is research what the market has done historically. When you have an understanding of the causes and effects related to past inflation, that will help with the decisions you make in the future.
Taylor Kovar - Family Man. Wealth Manager. Author. Speaker. Serial Entrepreneur. Travel Lover. Chick-Fil-A Fanatic. Kovar is the CEO and 2. There is a sweet spot. Inflation founder of Kovar Capital studies, of which there are plenty, Management LLC of Lufkin, Texas.
Page #25
Living with children Just about every marriage has its share of bad times; then again, some marriages simply go bad. The reasons for the latter include abuse, adultery, alcoholism (and other forms of John Rosemond chemical selfindulgence, aka addiction), and emotional and/or physical abandonment. Not to say that any one of those can’t be overcome, but they are four of the top five reasons why some marriages arrive at a point where there’s no going back.
problems by taking refuge in relationship with a child or children is cowardly, dishonest, and immature.
Some of these otherwise clearthinking adults might say their marriages were on the rocks, slowly coming undone, before the childidol in question arrived on the scene. Sorry, but that’s no excuse. Take it from someone who’s been married for fifty years (to the same woman as opposed to some cumulative figure), when bad stuff happens in a marriage, the responsible thing to do is focus on fixing it. Avoiding marital
Family psychologist John Rosemond: johnrosemond.com, parentguru.com.
People my age often talk with one another about the problems we see today’s young parents creating for themselves. We talk amongst ourselves because most of us have learned, the hard way, that relatively rare is the young parent who will listen to us much less take our advice concerning childrearing matters. On thing most of us observe is parents making idols of children. This idol-making takes numerous forms, one of which is posting daily photos of a child on some social media platform, accompanied by the day’s report of the child’s latest accomplishments I can’t think of (or find) an A-word (“Tiffany went down the slide at the park for the first time today!”), for the fifth reason; therefore, I’ve which no one should be deprived invented a new disorder (it’s what of knowing (and which all point to psychologists do, after all): postnatal marital amnesia, or PNMA. A nascent genius of one sort or recent column of mine on the need another). for the marriage to “rule,” in every sense, prompted a flood of emails, Two such idol-makers can make a letters, and even a few phone calls go of it (until their last idol leaves home at which point all bets are testifying to the contemporary off), but when one parent has made ubiquity of PNMA. an idol of a child and the other Take, for example, the fellow who understands and practices the difference between love and was essentially abandoned by his wife when their live-in young adult idolatry, well, uh-oh. I call it the daughter gave birth out of wedlock. child-centered divorce. In a way, Wife flipped into full grandmother the divorce simply makes official what has been the case for some mode and that was that. Or the stepmom who, when her husband's time: to wit, PNMA. teenage daughter visits for a As children, people my age or weekend, takes her pre-teen thereabouts were not fussed over, daughter (likewise, from a first bragged about, or made idols of. It marriage) and herself to a hotel so was obvious, furthermore, that our as not to experience her stepdaughter's disrespect and depraved parents had much, much more of a relationship with one another than behavior (said child enjoys telling they had with us. We understand, her younger stepsister about her therefore, that the benefit to a child sexual exploits) that dad, by his of being merely loved and own admission, pretty much disciplined well, as opposed to ignores for fear of upsetting her. idolized, is inestimable. On and on went these tales of woe. One failed or failing marriage after I certainly didn’t know it when I another brought about by misplaced was a young parent, but I know it now: The past is the greatest of all priorities; to wit, otherwise clearthinking adults who’d rather have a teachers, and the greatest teachers, wonderful relationship with a child furthermore, always possess great respect for the past. than with their spouses.
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John Rosemond has worked with families, children, and parents since 1971 in the field of family psychology. In 1971, John earned his masters in psychology from Western Illinois University and was elected to the Phi Kappa Phi National Honor Society.
