Post by account_disabled on Feb 22, 2024 3:09:23 GMT -5
Countries are quite good at dealing with inflation. They have to be. Mexico's inflation rate may be lower than the UK's at the moment (4.7 per cent), but it has been through many tough times since 1945, when Grupo Bimbo was founded. Inflation has averaged 19 percent annually for the past 60 years. If we analyze the countries in which the food manufacturer operates today, inflation in Argentina is around 115 percent annually. In Venezuela it is 400 percent monthly. The ability of some companies to still operate in economies like this demonstrates why international stocks are a natural home for investors when inflation is everywhere.
Readers may point out that as a global equity investor, I would say that. Maybe, but someone needs to do it. With interest rates rising and cash yielding 6 percent in money market funds – or 10-year British Pakistan Phone Number bonds yielding 4.3 percent – there is an obvious temptation to buy bonds and increase savings in accounts. high perfomance. But these high returns are often not higher real returns. Yes, you're getting a higher interest payment (which may be taxable), but the price of what you buy has likely increased even more. Stocks are less predictable and that makes investors uncomfortable with them. But the evidence suggests that in the long term they are better at generating real returns, above inflation. There are caveats to this statement. The transition phase to higher inflation is generally painful. Stock markets often fall due to high valuations that built up during an era of low inflation.
Stocks fell following the invasion of Ukraine and the subsequent rise in oil prices. Large increases in raw materials and wages require some adjustment, but good companies eventually adjust and catch up. Inflation can even be beneficial, giving companies an excuse to raise prices (and for some do so above inflation, permanently improving profit margins). Over the last three years, the total return on UK shares (including dividends) has been 36 per cent, while the cost of living has risen per cent. Global shares over the same period have returned 31 per cent in sterling terms; The UK figures have been helped by the payment of higher dividends. Last year was not an outlier. Let's look at what happened during the aggressive inflation of the . The FTSE All Share crashed in with a fall of almost per cent by the end of 1974, after the price of oil tripled.
Readers may point out that as a global equity investor, I would say that. Maybe, but someone needs to do it. With interest rates rising and cash yielding 6 percent in money market funds – or 10-year British Pakistan Phone Number bonds yielding 4.3 percent – there is an obvious temptation to buy bonds and increase savings in accounts. high perfomance. But these high returns are often not higher real returns. Yes, you're getting a higher interest payment (which may be taxable), but the price of what you buy has likely increased even more. Stocks are less predictable and that makes investors uncomfortable with them. But the evidence suggests that in the long term they are better at generating real returns, above inflation. There are caveats to this statement. The transition phase to higher inflation is generally painful. Stock markets often fall due to high valuations that built up during an era of low inflation.
Stocks fell following the invasion of Ukraine and the subsequent rise in oil prices. Large increases in raw materials and wages require some adjustment, but good companies eventually adjust and catch up. Inflation can even be beneficial, giving companies an excuse to raise prices (and for some do so above inflation, permanently improving profit margins). Over the last three years, the total return on UK shares (including dividends) has been 36 per cent, while the cost of living has risen per cent. Global shares over the same period have returned 31 per cent in sterling terms; The UK figures have been helped by the payment of higher dividends. Last year was not an outlier. Let's look at what happened during the aggressive inflation of the . The FTSE All Share crashed in with a fall of almost per cent by the end of 1974, after the price of oil tripled.
