Equity investing in an inflationary environment

Stocks provide higher returns

Inflation is not necessarily bad news for equity valuations.

Some inflation can be beneficial for companies' bottom lines as it allows them to raise prices and protect profitability in ways they may not have been able to do in recent years. It also helps selective banks and commodity-linked companies that have struggled in a low inflation, low interest rate environment. Average annual real returns at different US inflation rates (1970-2022) Even during times of higher inflation, stocks have generally provided positive real returns. Global equities have historically provided an effective inflation hedge when US inflation is between 2% and 6%, ...