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FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » Understanding inflation and share prices.

Understanding inflation and share prices.

4 posters

Go down  Message [Page 1 of 1]

Kaish86


Manager - Equity Analytics
Manager - Equity Analytics
I have a doubt can anyone clear.

Coconut rice chicken and all goods prices gone up from last year due to inflation. Due to that money not worth now.

Then why not shares does not reflect inflationary effect from last year without all other fundamental and technical factors assumed unchanged.

Should nt investors compensated for inflation for the shares they hold. 

Also should nt all our calculation such as our ROI, PER etc be discounted for inflationary effects.

kusxn likes this post

Kaish86


Manager - Equity Analytics
Manager - Equity Analytics
Holding 1kg of rice for 1 year could have given more return than holding shares these days with inflation.
Good dividend yielding shares or even 20% capital gains is useless comparing to the inflation.
I strongly feel stock market doesn't give better with current inflation except for few shares like EXPO.
Consumption is better than investment nowadays

ADVENTUS likes this post

ADVENTUS


Moderator
Moderator
@Kaish86 wrote:I have a doubt can anyone clear.

Coconut rice chicken and all goods prices gone up from last year due to inflation. Due to that money not worth now.

Then why not shares does not reflect inflationary effect from last year without all other fundamental and technical factors assumed unchanged.

Should nt investors compensated for inflation for the shares they hold. 

Also should nt all our calculation such as our ROI, PER etc be discounted for inflationary effects.
The market is hedge for inflation. As inflation grows smart people would use the money to trade in the market, than leaving it low interest fixed deposits or other fixed income funds. This would be ideal situation, if the country is doing alright otherwise. 
Not a buy/sell recommendation.

KavinduTM

KavinduTM
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
What was the inflation rate last year?

dayandacool

dayandacool
Moderator
Moderator
@ADVENTUS wrote:
@Kaish86 wrote:I have a doubt can anyone clear.

Coconut rice chicken and all goods prices gone up from last year due to inflation. Due to that money not worth now.

Then why not shares does not reflect inflationary effect from last year without all other fundamental and technical factors assumed unchanged.

Should nt investors compensated for inflation for the shares they hold. 

Also should nt all our calculation such as our ROI, PER etc be discounted for inflationary effects.
The market is hedge for inflation. As inflation grows smart people would use the money to trade in the market, than leaving it low interest fixed deposits or other fixed income funds. This would be ideal situation, if the country is doing alright otherwise. 
Not a buy/sell recommendation.
It's an equilibrium. It can't be changed by the use of word gimmicks (Modern monetary theory or what ever they call it).The point u miss is when the inflation goes up, It will be very difficult for CBSL to keep the interest rates low. With the increment of the Interest rates, momentum will shift towards FDs and vice versa.  Very Happy

Ctg likes this post

dayandacool

dayandacool
Moderator
Moderator
@KavinduTM wrote:What was the inflation rate last year?

Your guess is as good as mine. It's all Gimmicks  Very Happy

https://www.cbsl.gov.lk/en/measures-of-consumer-price-inflation

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