Market winners during 70's high inflation

Cus

As per title, what areas/asset classes seemed to provide a reasonable return during the high inflation period?

masonic

It depends what you class as reasonable. The best way of weathering a period of high inflation is to make above inflation returns in the period before and after.

InvesterJones

Well there was an oil shortage, so if you happened to have a stock of oil you were quids in. Today natural gas prices are pretty high, so I guess if you hold that you're also doing well.

In both cases it's far too late to do anything about it once the shortage has kicked in.

sevenhills

Do food retailers do well, as opposed to those selling general or high value goods?
So Morrison's, Aldi etc

coastline

 During the 1970's real returns were flat at best.

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Stock markets around the world were volatile in the 1970s. The S&P500 fell almost 40% during a bear market that lasted for most of 1973 and 1974, before rebounding over the next five years. The UK fared even worse, with the FTSE All Share losing more than 70%.

Profits actually grew in nominal terms by 9% annually during the 1970s. However, fearing that the economic malaise would never end, the multiple that investors were willing to pay for those earnings roughly halved, with the S&P500 ending the decade on a PE ratio of just 7.5.

Inflation: back to the 1970s? - Asset management - Schroders

Looking at the bottom left hand corner of the chart it shows US valuations under P/E 10 by 1980. Today the forward P/E of the SP500 is 17 . FTSE is way lower  . Maybe there's value there ? European stocks will be similar. ?

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MSCI Forward P/Es (yardeni.com)

1970's..Gold and Commodities.

A look at inflation and investment performance (putnam.com)

Worried About Inflation? Here’s What Investments Worked In The 1970s | Seeking Alpha

bd10

@OP:

There's published research literature (both academic as well as from asset management industry) to that effect in the public domain. I went through this exercise during large parts of 2021.

woolly_wombat

bd10 said:

@OP:

There's published research literature (both academic as well as from asset management industry) to that effect in the public domain. I went through this exercise during large parts of 2021.

Are you able to provide links for the OP?

dunstonh

The markets have already moved from growth to value.   So, its a bit late to be looking to beat the curve.

woolly_wombat

Don’t sell the family silver for a while yet.

JohnWinder

Here's some history; whether it repeats is another matter: https://www.firstlinks.com.au/inflation-impacts-different-types-investments

Cus

JohnWinder said:

Here's some history; whether it repeats is another matter: https://www.firstlinks.com.au/inflation-impacts-different-types-investments

I saw the thread title and thought that was interesting, then realised it was mine from last year!

@dunstonh seems like we went back to growth stocks for a bit, who would have guessed..