At the heart of the issue of avoiding loss is the math behind significant losses and how detrimental they can be to a portfolio's capital. The following table makes it evident that a long-term investment strategy must mitigate substantial drawdowns.
Conventional stock market wisdom has promoted a fundamental relationship between P/E ratios and interest rates. It has relied upon a key assumption that inflation is positive. As reflected in this chart, P/E ratios increase when the inflation rate trends toward price stability (near 1% inflation) and P/E ratios decline when the inflation rate trends away … Continue reading Inflation is the biggest driver of stock returns