Have we ever had a precedence of such rapid run up of oil prices and inflation in history ?
How did the equity Markets behave during that period of high inflation/oil prices. what were the strategies that worked ?
Answers
3963 points
MNSL answered one year ago …
History has proved even during inflation period intelligent investors have made good returns by investing carefully selected stocks in the stock markets.
Sometimes some intelligent investors were able to find outstanding companies for great value.
2775 points
Oldman answered one year ago …
this has happened many time in the U.S., the last time in the 1973-1981 period. At the beginning, although there weren't ETFs or investments as varied as today, bullion prices began to rise, then Paul Volcker raised the Fed's lending rates to > 12% and that stopped the inflationary cycle (at the end, you could buy zero coupon Treasuries that were of 30 years duration and yielded 14 %/ann.) That was a period of "stagflation"...the economy contracted for the period 1974-76, then stumbled along for a few years, then bottomed out about Aug. 1982. Then, the markets took off...there were brief hiccups in 1987 and 1990, but the final bubble was the Tech stocks in 2000-2001.
The current situation is much more difficult because a lot of the structured & UNvaluable notes, credit default swaps and tight capital flows are still unwinding, here and in the developed EU.
