I know one guy who manages one of the largest investments funds in Canada. He's what many would call 'a high roller'.
@Joe The term "high roller" is not used for someone who manages investment funds, you idiot.
@Joe You fuckin' peasant. You have no self respect and for good reason.
Like @Seamajor I'm invested in gold, silver and cash at the moment
@Joe Like him are you talking about
tens of thousands of dollars too?
Hahaha!!!
But as they say, as inflation surges, the actual value of those stocks contines to decline Prowler.
That is incorrect. The stock price might go down temporarily, but the
actual value increases on par with inflation.
During inflationary periods, the hard assets of a company do what? They increase in value in terms of a dollar amount. But that is
not reflected in the financial statements, but it
is reflected in
reality.
Here are examples: Real estate that used to be worth X amount of dollars is now worth X + increased value due to inflation. Office equipment that used to be worth Y amount of dollars is now worth Y + increased value due to inflation. This holds true for all hard assets.
You should be getting the picture right now
@Joe (but I doubt you are...).
So, what will happen in a properly run company is the Owner's Equity will be artificially low in the books (which will, surprise surprise, cause all
your emotional investors to panic), but the people running the business will understand the need to continue to operate (as I will describe below) as if the O.E. is what it
actually should be. What this will do is cause the
Return-on-Equity to be
artificially high. Again, because of the
artificially low O.E. in the books, and
profits being what they should be based on the inflated dollar, the Return-on-Equity will be higher than normally expected.
Due to inflation, a company's gross profit will shoot up. So will it's expenses. But the profit margin, as a percentage, will be the same if the company's CEO are other officers are worth their salt. So, again, consider that the income and the expenses have dollar amounts that reflect the
current inflated value of the dollar, while the Owner's Equity in the books reflect
the pre-inflation value of the dollar.
Now we are getting the unintelligent masses saying things like
"You are price gouging!!!!" to companies like Loblaws in Canada and Cal-Maine Foods in the USA. But they have people working there (CEOs, CFOs) who are smart enough to know that they are operating at profit margins that make good business sense based on what I just described.
It takes a little bit of time, but the market corrects itself. Part of this is due to the fact that the book value of assets will slowly come in-line with their actual market value as old assets are depreciated and new assets are purchased.
I know this is way beyond your level of understanding,
@Joe.
FYI,
@Joe, in a couple weeks I will be investing about $100K (from a couple long term investments maturing and from some dividends are being paid to me) that I will be putting mainly into
the stock market. What kinds of stocks, you might ask?
I already mentioned two.
Cal-Maine Foods has a PE ratio of 3.67 and a dividend yield of 8.44%
Loblaws has a PE ratio of 3.89 and a dividend yield of 5.81%
I am considering buying more Rio Tinto, but I do have a lot of it already (it is responsible for a good chunk of the aforementioned dividends that will be flowing into my trading accounts soon) and I expect the price to soften a bit by the fall/early winter, so we will see. I might time that purchase for later in the year.
@Joe Half of those fuckwits that you listen to just want to keep people in a state of panic so the volume of trading stays high. The have hundreds of limit orders on the go at a time and they make a percent here, a percent there several times a day to small investors who do not understand the game.
@Joe You do not understand the game.
This is a
Buyer's Market,
@Joe. I gave you some decent tips. The really good ones
I am
keeping to myself.