Sunday, April 19, 2020

Hyperinflation's Effect on Stocks

Increasing Stock Prices

Stock prices will be affected in times of hyperinflation, driven by the overall increase in prices of all other goods and services. These increases in pricing would cause sales and profits to increase, which could also increase dividends paid by companies, as well as increasing the prices that stocks sell for, sometimes significantly.

Overall Economic Effects

Hyperinflation causes prices to rise dramatically, and although it is followed usually by wages rising as well, wages may not rise as quickly as prices, and it can lead to some people having significant problems paying for necessary goods and services. In addition, people who have cash in savings accounts or certificates of deposit will see that cash devalued quickly. The problems that people have making purchases due to hyperinflation can cause companies to have financial problems due to weak economic conditions and may also cause these companies to go out of business.

Protections Against Hyperinflation

Real estate is traditionally a good investment in times of high inflation, particularly if you have a fixed-rate mortgage. The reason for this is because you are paying back the mortgage with money that is reduced in value due to inflation. Stocks can work well in a hyper-inflationary economy, but generally only if your portfolio is well diversified with many stocks and you hold on to the investments over the longer term.


Which stocks?


https://finance.zacks.com/hyperinflations-effect-stocks-8211.html

No comments:

Post a Comment