What investment will you pick in a country with inflation (Not exessive inflation) Equity / Bonds?
please tell me Why?
Think about US stock market - when there is interest rate cut - on that day…lot of money flows into Equity Market !!! ( AM I THINKING CORRECTLY) !!
If inflation is there then Bond interest rates might not be able to keep your buying power but Equity most likely will. That is what I think though. Still no solid base reason.
What is increasing the value of an equity during inflation? I was reading the porfolio management and found that UK investors prefer equity over bonds because of the prevailing higher inflation.
Thats a good reason. I also think, during the time of inflation, revenue may be high --> higher net income ----> higher dividends. Or during the period of inflation, the volatility may be high and there may be misprising I don’t know the real reason.