If there is no, or negative inflation, the COLA for that year will be zero — in other words,
even in a deflationary environment, Social Security benefits aren't adjusted downward.
Sorry, what I meant was how to do square Hicks» optimism about P&C insurers»
prospects in a deflationary environment with Buffett's warning that the decreased earnings on float will lead to hard times for the industry?
Good luck computing a dividend discount model [when the denominator is negative]... Obviously, growth could be
pressured in a deflationary environment, but many businesses would retain absolute pricing power and have [theoretically] infinite value.»
With this in mind, even if you're unsure of which scenario we're looking at into the future, some of these ETFs that would be expected to perform
strongly in a deflationary environment are worth a look:
In deflationary environments, as the dollar becomes more valuable and the prices of assets collapse, investors can be slaughtered.
In a deflationary environment you'd still have portfolio stability with the bonds being there
Contrary to the concerns over income investments declining in an inflationary environment when inflation erodes the return of income instruments,
in a deflationary environment, income investments actually look more attractive.