Lessons from the long run: inflation, stagflation and commodities
Commodities have low correlations with equities and bonds, and can serve to hedge against inflation. But can you stomach the potentially long and deep drawdowns?
Genevieve Cua
WE are all familiar with the standard caveat for investments – that the past isn’t predictive of the future. But from the perspective of more than a century of global market data, are there insights that investors can glean?
Credit Suisse Global Investment Returns Yearbook, published annually, singles out a particular area of focus in every edition. For its 15th edition published recently, professors Elroy Dimson, Paul Marsh and Dr Mike Staunton of the London Business School looked into two areas of particular resonance for investors today: commodities and inflation.
How well do the various asset classes – equities, fixed income, and commodities in particular – serve as hedges against inflation? What about a stagflationary environment? Some patterns may well surprise you.
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