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InFocus
Foreign Stocks –
Inflationary & Deflationary Times
June 15, 2021
In our last issue: “Monetizing Inflationary & Deflationary Booms & Busts – May 25,” we reviewed inflation-bred booms-busts and deflation-bred booms-busts to reveal the performance of stocks, bonds, cash, and commodities since 1920 along with Reflexive Asset Allocation (RAA, Appendix), a methodology that over- and underweights portfolios to asset classes and alternative assets strategies (Figures A-B). After 1946 and prior to 2008, most investors feared the last war, a 1969-1979 inflationary bust when mean inflation was 8%+ and stocks and bonds had negative returns. They had lost their fear of a 1930s-type deflationary bust.
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