STOCK RETURN-INFLATION PUZZLE

Common Stocks, Hedging and Inflation

Common Stocks, Hedging and Inflation

In an attempt to test the predictions of these theoretical studies, past researchers hypothesize that there are aggregate demand and supply disturbances that affect the stock return-inflation relation. Many countries are moving towards a long period of massive inflation. This is what we see on the news, what economists write in their comments, what politicians and discuss only a few of us can claim their pessimistic forecasts (Poitras, 2010). Supply that is the real output shocks drive a negative relation, though demand that is the monetary shocks generate a positive relation between common stocks and inflation, and the observed relation is a result of the interaction between demand and supply disturbances (Bolten, 2000). Luintel and Paudyal, (2005) in their study have recognized the importance of inflation and hedging in context of common stocks. However, an important and yet unanswered question is why some stocks are more exposed to fluctuations in market liquidity than other stocks with similar inflation and characteristics. Promising market-place hedge-funds have been evaluated as one amongst many approaches in hedge fund efficacy measurement discourse. Nonetheless, all these writers do not investigate these funds in element or strive to extort the chief distinctions among these funds and other hedge funds (Bolten, 2000).

Some may wonder why we need to think about investing in assets when we have our jobs safe. They provide for us. Well, no work is safe work. Who knows what can happen and it is always better to prevent rather than respond. Even if you are single and / or do not have children you will need an income to make ends meet, if you lose your job and can not find another immediately.Nobody can say what is the best solution is, but we must look ahead and then take a few precautionary measures (Poitras, 2010). Invest in the best house we can afford seems like a good idea but it's not a cheap option. Investing in stocks is another possibility. Real estate and farmland are currently on the agenda of many people when it comes to potential investments, but they offer the protection we need? This is a difficult question with an answer just as difficult.

Investors are trying to find ways to prevent inflation. They are looking for these assets that can grow in value faster than inflation increases. Like everyone else they have to hedge against inflation (Poitras, 2010). There are several things that we, as individuals can do to protect ourselves and / or our families in times of recession.This is rather startling, particularly prearranged the comparative significance of rising market-places in the hedge fund business. Further the fundamental aspects, for instance promising market place stock and bond catalogues, are lately more easily obtainable than for other hedge fund policies which engage more multifaceted arbitrage tactics. Our examination will confirm that suitable factor models can be resultant much more easily for up-and-coming market-place hedge-funds than for other hedge ...