In a hyperinflation, equities are the place to be.
Hmm, can you explain?
I would think leveraged hard assets (land, buildings, mortgages, gold) are the ideal investments during hyperinflation. Pay off that land with waste paper.
schu
Not necessarily. There have been real equity declines in inflationary environments, and equity increases in deflationary ones.
Equities are only the place to be if you expect capital gains or dividend yields superior to yields from other investments - like bonds, CDs, etc. The combination of massive number of baby-boom retirements coming over the next 20-30 years and the fact that PE ratios are still not substantially below average indicate that capital gains (that is, stock price run-ups) are prob not a realistic expectation for a while. And dividend yields are purely a factor of fundamental company cash flow and profitability.
In theory you're correct. The reality though is that equities are extremely risky right now, many are losing literally everything in the market.
Who would have thought a year ago that all of the major Wall St. investment banks would no longer exist, and companies like Circuit City and Linens & Things would disappear. Icon builders like Levitt are toast, with WCI and Tousa probably soon to follow.
I'm guessing that stocks - if they don't sink even further - are going to flatline for quite some time. Too many people, big and small, got badly burned. Confidence and trust is about nill.
If I were to invest in equities at all (which I'm not), it would strictly be "need" stuff (perhaps like consumer staples or commodity types) then only those companies with very low debt along with good cash and assets.