Moderate Inflation Benefits Equities

During moderate periods of inflation, equities tend to generate decent performance results. I posted the below chart in a post, Where To Invest In An Inflationary Environment, in mid 2010 that details the performance of various investment categories based on different inflation ranges going back to 1972.

From The Blog of HORAN Capital Advisors

Since mid year 2010 inflation has been trending higher with the latest year over year report showing inflation running at nearly 3.5%.

From The Blog of HORAN Capital Advisors

The blog at Crossing Wall Street selected the below chart as the Overlooked Chart of the Year. The chart compares the S&P 500 Index to the market’s expectation for inflation (the 10-year TIP spread). Of late, there has certainly been a high correlation to higher inflation expectations and the S&P 500 Index return.

From The Blog of HORAN Capital Advisors

Determining the true level of inflation is also a frequent topic. The Shadow Government Statistics (SGS) site makes an effort to track data on indexes when the calculation methodology is changed. In 1990, the CPI calculation was changed and a comparison of the current CPI versus the 1990-based calculation can be found on the SGS site.