Sure, and many products and services will see impacted earnings.

However, can you stop spending on mortgage/rent, food, clothes, heating/cooling, petrol?

I know I can’t, and it is the providers of those goods/services that will adjust their prices to inflation, and not suffer a major dislocation in demand.

The message is, you need to be selective in your stock picks.

jog on
duc

Ahh yes, how negligent of me.

Complete,

Apologies for confusing you with Kat.

Inflation within commodities prices can occur certainly without the participation of the unemployed.

The reason for this, and why inflation takes time to become apparent is that inflation always starts at the top of the pyramid, with those who have early access to the new money.

As they spend, their purchasing power is initially increased, as general price levels do not reflect the effects of the expanded money supply.

The further down it trickles, the greater the visability of a growing inflation.

By the time it reaches the unemployed, they receive none of the early benefits, and the full-force of the problems.

Unless Bernanke, who is aware of the problem, can drain the money supply, before inflation takes hold, while simultaneously not choking off any recovery, then all will be fine.

jog on
duc

I’ll respond to both of you tomorrow when I’m able to think.

Well, mainly due to inflation being government policy. As earnings levitate due to inflation, asset prices also rise, at about the same rate as your purchasing power shrinks.

Now, should you get inflation, without a collapse in the dollar, as we had 1995-2000, then you have conditions for a massive bubble…again.

Forget what the “public” thinks…they are clueless.

jog on
duc

Who believes that corporate earnings will return to what they were in recent years?

I’ve been out shopping lately and I still see only sparse activity at best. I live in an affluent area. The major city that I live near has a massive budget deficit due to reduced sales tax receipts.

Most Americans are now worried that they will lose their jobs.

Those anecdotes don’t build confidence in an earnings Renaissance any time soon.

One last note; At least where I live, the “Stimulus” money is being used to keep public pension obligations from default. Not exactly the bricks and mortar re-building of America that everyone was promised. The “Stimulus” dollars are also being used to fund social programs.

That P/E is the current P/E…which due to the collapse in earnings, and current rally computes out

If however you take 10 year trailing aggregate earnings, and recalculate, then, it is lower.

If you believe earnings will recover to at least their average…then you buy.

This is why stockmarkets anticipate earnings recoveries, it’s a reversion to the mean trade.

jog on
duc

You know how it is. It’s nice to know, but this doesn’t help me trade.

Hope this helps someone make a decision re: investing though.

I’d like to buy SPY but not with P/E like that.