Inflation-Sensitive Assets
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Equity Investments and Inflation
Steven Bregman and Murray Stahl
Equity Investments and Inflation
Foreword
Inflation-Sensitive Assets
Investable Commodity Indexes and Inflation: A Brief History
Commodities, Inflation and Growth: Implications for Policy and Investments
Inflation and Real Estate Investments
Infrastructure Assets and Inflation
Equity Investments and Inflation
Inflation-Linked Markets
Understanding and Trading Inflation Swaps and Options
The Role of Models in Modern Monetary Policy
Term Structure of Interest Rates and Expected Inflation
Monetary Policy, Inflation and Commodity Prices
Inflation and Asset Prices
Inflation and Equity Returns
Inflation Hedging through Asset and Sector Rotation
Practical Models for Inflation Forecasting
Protecting Insurance Portfolios from Inflation
Inflation, Pensions and Liability-Driven Investment Solutions
Ultra-High-Net-Worth Investors and the Real Asset Value Chain
Inflation Markets: A Portfolio Manager’s Perspective
Inflation Indexation and Products in Emerging Markets
Unlike a stock market crash, inflation erodes wealth insidiously and covertly. Given the unprecedented amount of stimulus provided by the US Government between 2008 and 2011, the utmost vigilance is required to protect the real value of assets from the effects of inflation. In this chapter we shall discuss some investment strategies that can help to achieve this objective. Traditional methods of acquiring inflation protection, such as purchasing physical gold or other commodities, might not be the most effective, as better and less speculative alternatives exist. In particular, there are business models, and thus equity securities, which benefit during periods of inflation yet do not necessarily depend upon inflation in order to prosper. In addition, under certain conditions, some fixed-income securities, such as convertibles, can also offer inflation protection. In this chapter we shall cover such equity strategies and examine their more salient characteristics.
INFLATION AND EQUITY PRICES
The complexities of inflation and how certain equity investments might mitigate its effects are not always as obvious as they may seem. It can be most challenging to discern the diverse
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