In the September 2012 draft of his book chapter entitled ««Real» Assets», Andrew Ang examines the behaviors of the following assets commonly thought to hold their value
during times of high inflation («real» assets): inflation - linked bonds, commodities, real estate and U.S. Treasury bills (T - bill).
Because
during times of high inflation, you will have a larger than normal income stream funded by underlying rents that can be increased to keep up with inflation.
Not exact matches
The introduction
of the major elements
of the new tax system in July will lead to temporarily
higher CPI
inflation in the September quarter 2000, followed by a period
of time during which reductions in various taxes flowing through to prices will reduce measured
inflation.
For some
time, underlying CPI
inflation has been held down by the lagged effects
of the exchange rate appreciation that took place
during 2002 and 2003, while domestically sourced
inflation has been
higher.
It includes conditions like the one after a
high economic growth period leading to
high inflation and fears
of slowdown, or
during uncertain
times when the central bank is expected to increase interest rates.
That is a long
time horizon
during which
inflation will erode the value
of a low volatile portfolio
of only
high quality fixed income funds.
It is true that stocks tend to do poorly
during times of high or rising
inflation.
Not only do you buy something with the potential to increase in value through capital gains, you also receive cash flow
during the
time you own it... and ON TOP
OF THAT
high quality companies that produce products people need in any economic environment have the ability to use their pricing power to raise the prices on the products they sell, thereby cushioning you
during inflation.