      aswathdamodaran.blogspot.com · 2021-05-24
      · 1837d
    

Inflation and Investing: False Alarm or Fair Warning?

This article provides a comprehensive analysis of inflation mechanics, measurement, and historical impact on asset valuations across stocks, bonds, real estate, and gold. The author examines how both expected and unexpected inflation differentially affect various asset classes and concludes that unexpected inflation generally depresses equity and bond valuations while benefiting real assets like gold and real estate.

6 metrics· Cited 0× in the knowledge base ·Open source ↗

Metrics in this report

Average Historical US ROE

12%percent

average

Historical US corporate returns across inflationary and non-inflationary periods

Consumer Inflation Expectations

3.2%percent

current

University of Michigan consumer survey as of April 2021

Expected Inflation Rate

2.42%percent

current

US treasury markets as of April 2021

NASDAQ Return YTD

5%percent

current

As of May 2021

Probability of Inflation Exceeding 2.5%

60.86%percent

current

Federal Reserve Bank of St. Louis estimate, April 2021

S&P 500 Return YTD

11%percent

current

As of May 2021