Stocks Are Not An Inflation Hedge

Bloomberg macro strategist Simon White argues that stocks are a poor inflation hedge due to their high duration, which makes them susceptible to repricing as inflation rises.

Key Takeaways

• 1.Stocks are often incorrectly viewed as an inflation hedge; however, their high duration makes them vulnerable during periods of rising prices.
• 2.The higher the duration of an asset, the longer an investor must wait to reinvest at new, higher rates, making stocks unattractive when inflation is elevated.
• 3.Historical data from the 1970s shows stocks were the worst-performing asset class due to their high duration compared to commodities and bonds.

Table of Contents

• In It to Win It... record monthly jump in FMS equity allocation
• Higher Duration Meant Lower Returns in 1970s
• Tech Has Highest Duration

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