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by burnerthrow008
264 days ago
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The only thing I would add to your point #3 is this: * Given the same profit margin, higher overall prices mean that firms will have higher profits. * The value of an equity is the discounted sum of all future profits. That is, stocks are a hedge against inflation. Investors are willing to pay "unreasonable" prices today because they expect that increased future cashflows will cause the price to become reasonable. |
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