Stock prices can hedge against inflation, new study finds.
The study looked at how stock prices and goods prices are related over a long period to see if investing in the stock market can protect against inflation. Data from sixteen countries between 1970-2006 was analyzed. Different inflation scenarios were considered, and tests were done using a combination of data from all countries. The results show that there is a positive connection between goods prices and stock prices, supporting the idea that stock market investments can help hedge against inflation.