How should investors prepare for repeat inflation shocks?
Forget transitory v persistent. The new fear is that price pressures are “structural”
Buy stocks so you can dream, buy bonds so you can sleep—or so the saying goes. A wise investor will aim to maximise their returns relative to risk, defined as volatility in the rate of return, and therefore hold some investments that will do well in good times and some in bad. Stocks surge when the economy soars; bonds climb during a crisis. A mix of the two—often 60% stocks and 40% bonds—should help investors earn a nice return, without too much risk.
This article appeared in the Finance & economics section of the print edition under the headline “Recurring nightmares”
Finance & economics August 13th 2022
- An oil windfall offers Gulf states one last chance to splurge
- How should investors prepare for repeat inflation shocks?
- For a change, American inflation is lower than expected
- Which European countries are most vulnerable to surging energy prices?
- China’s mortgage boycotts are a symptom of a broader crisis
- Short-sellers are struggling despite a bad year for stocks
- America v Europe: A comparison of riches leaves both sides red-faced
From the August 13th 2022 edition
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