[selectodude]

This is dead-on, but just to add to this, none of your investors are investing in your company for a 7 percent yearly return. The SPX will almost guarantee those. They want grossly outsized returns that are large enough for inflation to be a mere speedbump. Inflation shouldn't even enter the conversation.

[PragmaticPulp]

> This is dead-on, but just to add to this, none of your investors are investing in your company for a 7 percent yearly return.

Great point.

Also remember that your investors are investing specifically in your business, not giving you the money to re-invest in something else.

If you take investment money from someone to run a business then turn around and flip it into stocks or Bitcoin or something, you're going to have a serious problem if the value goes down. You might even have a problem if the value goes up. Investors don't take kindly to someone losing their money on something that wasn't agreed upon.

[hogFeast]

Inflation does enter the conversation for investors. Risk-free real rate is -450bps, equity risk premium is historically 200-300bps so implied return for SPX is -150bps.

One of the arguments is that things like tech will protect value because they have pricing power/growth or something similar, but this hasn't worked if you are starting from high valuations because inflation tends to change the cost of equity quite significantly, as the original calculation showed (to be clear, the point is that the price for bonds and/or equity is very wrong)...valuations are very high, a financial shock when you starting from a valuation that implies equities have no risk will be severe.

I am not saying that anyone should do or not do any specific thing but inflation, if it persists, will impact everyone because the effect of inflation is not limited to prices rising. For example, inflation might not impact you but a risk-free rate of 10% might.

[worik]

> The SPX will almost guarantee those

Interest new use of the word "almost"

[nuclearnice1]

Hardly new.

> But your father doesn't want to invest, say, ten thousand dollars in it, though I can almost guarantee that he'll get five times that sum back.

Tom Swift and His Giant Cannon 1913

https://www.gutenberg.org/files/1361/1361-h/1361-h.htm