Are Equities a Good Inflation Hedge?


(ZeroHedge)—While many believe that with the output gap so wide that inflation is not an immediate threat, longer-term, as UBS notes, excessive money printing could indeed generate inflation and that inflation expectations are unusually volatile and could quickly be dislodged. This inflation hedges are a very valid concern. An oft-cited reason for owning stocks is that they have an implicit inflation hedge, however, just as with many market myths, UBS finds that, in fact, equities do not look like a compelling hedge against rising inflation. Indeed, they provide an appropriate hedge to rising inflation only in a limited number of cases. In short, equities provide only a partial hedge – one which works only for small positive inflation shocks.


About Brent Parrish

Author, blogger, editor, researcher, graphic artist, software engineer, carpenter, woodworker, guitar shredder and a strict constitutionalist. Member of the Watcher's Council and the Qatar Awareness Campaign. I believe in individual rights, limited government, fiscal responsibility and a strong defense. ONE WORD: FREEDOM!
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