Inflation nd stock market ..??

Question

plzz help me understand d relation b/w inflation nd share market..

i just want to know dat how is share market effected by inflation..

why does share market fall/rise wid inflation

some basic reasons plzz.. so dat i can understand it well..!I

kn how does price rise

but why does stock market ( stock exchange or wateva it is..) falls..lyk deres in news dat stock market closed wid a drop of 300 points etc..

hs it gt nethin to do wid inflation? If yes den wat?

thanx <3

Answer 1

There are different kinds of inflation.  And the stock market&#039;s reaction depends on what kind of inflation you are talking about.

When you have inflation of prices, while people&#039;s wages stay they same.  Then people have to cut back on their consumption because everything costs more but people don&#039;t have more money to spend.

In an economy like that of USA, about 70% of economic activity comes from consumer spending.  And when it looks like consumers will have to cut back on their spending.  Then this is bad for the whole economy, including public companies whose shares are traded on the stock market.  And that&#039;s why investors sell their shares of these companies at a lower price than before.

Answer 2

Need to know too &amp; starred your question!!

Answer 3

Warren Buffet was quoted as saying inflation is &#039;Exploding&#039; across the country. Inflation has an impact on our plans for the future. When saving for retirement, college, a house, or simply budgeting for the next 12 months, the cost of goods and services have a direct impact on your goals. Due to inflation, your goals may cost more in the future than today.  As far as your money goes, the kind of inflation we&#039;re experiencing can be a real killer. It drives up interest rates. It destroy purchasing power. It can destroy your nest egg. It can affect wages, housing, etc. I found a website where you can understand the situation and track your true inflation at http://www.viritix.com.

Answer 4

Rising inflation means people will have less money to spend.

As more money(higher prices) is spent on food and petrol and so on and less money to invest hence the stock market fall.

Also companies will earn less profit as sales slow down and dey will less money to expand.

Stock market normally anticipate what a economy will do and at de moment it looks bad hence de fall.

But if you have money to invest in the stock den these times a are best to invest.

Stocks and shares will rise eventually.

Buy low and den sell high.

June is also a bad month in de stock market.

Wait and see de market will start to rise sometime in September.( dont take my word for it but that is what history tells us)

Answer 5

Try Wikipedia - that&#039;s what you&#039;ve told others to do !