You're doing what all responsible people do. You're saving for the inevitable years when you are no longer employable, to old, to tired, and companies simply won't hire you. You're saving for retirement. You also aren't a fool. You know that the dollar is constantly eroding in value, purchasing power. And you know that sometimes, Fed policies cause rapid devaluation of the dollar. So, you've carefully, strategically balanced your portfolio based on your age or whatever your objectives are.
Let's do a thought experiment though. Yesterday, you stored some of your wealth in A Very Valuable Company (AVVC). You exchanged your earnings, $1 USD for 1 share of AWWC, which was valued at $1 per share.
Today, the Fed turned on the money printers and gave EVERYONE precisely whatever amount of money they had X2. They doubled the amount of money in circulation. Immediately the valuation of property taxes doubled. The valuation of milk doubled. The valuation of cars, doubled. The valuation of houses, doubled. The valuation of peanuts, you guessed it, they doubled. The cost of every single thing doubled.
Someone comes to you and says, “yo buddy, macroeconomics, financial statements, supply chain, wars, inflation, downward pressure, wages, employment figures, blah blah blah blah blah, will you sell me that share you have of AWWC for $1”. Keep in mind, if you trade back from AWWC to USD, you will get $1, but that $1 will buy exactly half as much as it would before the Fed doubled everyone's money, cut the valuation of the dollar in half.
How much should the valuation of AWWC be in this thought experiment? Also, the reason you bought 1 share of AWWC is because you expected the company to continue to innovate, build, and grow. Do you want to break even? Do you want gains? Gains in what? Dollars or purchasing power?
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