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Trefftzs Award: The Variation of the Return on Stocks in Periods of Inflation

Published online by Cambridge University Press:  19 October 2009

Bruno A. Oudet
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Extract

The bear market of the late sixties amidst inflation has led to growing concern over the validity of the proposition that stocks provide a good hedge against inflation. Conflicting arguments have been raised on both sides of the issue but a synthesis has as yet failed to emerge. The gains resulting from a careful assessment of the various propositions are obvious. If stock prices are adversely affected by inflation, the financial analyst must search for other hedges against the erosion of the purchasing power of money, while the economist must note that inflation has a depressing effect on economic growth through the rise of the cost of capital.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 8 , Issue 2 , March 1973 , pp. 247 - 258
Copyright
Copyright © School of Business Administration, University of Washington 1973

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