I'm not investing to lose purchasing power. I invest to not only offset inflation, but appreciate the progress and gains of profitable and innovative companies. Every investment I've made is in a company that has continued to not only be profitable, but grown their profits, created new services and products and innovations. So, in light of all of that AND inflation AND the effects of rate hikes on the general market and stock valuations, I say stocks are stupidly undervalued right now.
Say you bought 1 share of “Awesome Company” just 3 years ago for $100 and have held till today. Inflation alone wiped down your purchasing power. IF you could trade back for cash to “break even” right now, to get your $100 USDs back, then you would at best have $70 in purchasing power due to inflation. What you gonna do with $70 after having invested $100 for 3 years?
Anyhow, it's actually worse than that right now. The rate hikes had a total market effect. Valuations plummeted. In reality, this has ruined a lot of working class people, forever, till they die. Inflation robbed them of more than 30% of their purchasing power on lifetimes of earnings/savings, but rate hike market crashing wiped down valuations about 30 to 40% as well. Let's go with 30% for easy math, and talk about your 1 share of “Awesome Company”. Right now, that share has a market valuation of $70. But wait, don't forget that inflation devalued the dollar. So, if you trade that share you bought for $100 back to USDs right now, you get $70 USDs, where each has lost 30% of their purchasing power, which means for your 3 year investment, in a growing and profitable company, you now have $49 in purchasing power. That's right, you have lost over 50% of your purchasing power.
The market is ridiculously undervaluing companies in all this turmoil, good ones are getting suuuuuucked downwards even as they report their highest profit margins and revenue ever.
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