The effect of inflation on stock prices Essay Example | Topics and Well Written Essays - 750 words

The effect of inflation on stock prices - Essay Example inflation is dependent on the time horizons as it is subject to fluctuations over shorter periods but more stable over a long term horizon (Sharpe Steven, 2000). In the global scenario some companies can react to inflation by raising their prices but this can be affected by the competition as others may not be subject to the same inflationary trends within their own insulated economies ((Little, Ken). Inflation results in the rise in prices of the stocks with no corresponding increase in value with the ultimate loss to the investors in that particular stock. Theoretically the stocks are a good hedge against inflation because a company’s earnings and revenues usually grow at the same rate as inflation (Little, Ken). Some of the good inflation hedge instruments are gold, real estate and money market funds. Different sectors in the stock market show variable response to inflationary trends. Fixed instruments like government securities and bonds tend to be secure investments but y ield very poor returns in the face of inflation as the purchasing power of the currency is greatly reduced and moreover the taxes on the gains accumulated over a period of time negate the interest earned over that span. Investments in stocks are therefore recommended to defeat inflation as it serves as an insulator against the devaluation of money as the companies are themselves more worried about the profitability of their assets and take adequate steps and means to tide over inflationary and other trends affecting stock markets. The art of preserving one’s wealth during recession requires great insight into the market situation and switching funds between risky and safe investment instruments from time to time are the hallmarks of a good investor. The true stock market price after adjustment for inflation is the real indicator of the status of one’s investments. If the stock market goes up at a better rate than the inflation, the profits will depend upon the difference between the two

Are political parties beneficial or detrimental to democracy in Essay

Are political parties beneficial or detrimental to democracy in Australia - Essay Example The fact that they are vehicles for the further development of the Australian society cannot be underestimated because political parties can be said to be the foundation upon which the democratic system as practiced in this country is built and without them, then the democracy which has been long practiced and has become a basic part within Australian life would end up being meaningless. It is a fact that the political parties within Australia have led to the further development of democracy in the country and because of this, Australia can be considered to be among the most democratic countries in the world, boasting of a population that is free to actively participate in politics. Because of the existence of political parties in Australia, as well as the compulsory voting system, there has developed, over the past few decades, a political system in this country where most of the individuals within it have come to participate in politics in one way or the other. ... Australian democracy can be said to be based on its political parties because it is often through them that the Australian people get to express their political opinions as well as ensuring that the changes that they want in their society are implemented. Political parties are extremely beneficial to democracy in Australia because they help in the swift development of the systems which are necessary to sustain the said democracy (Economou, 1997). It is often in the interests of the political parties involved to ensure that they maintain the democratic system in Australia because not to do so would create a situation where the entire state would fall into chaos, since there would be no stabilizing factor in the political sphere of society (Walsh, 2001). This shows that political parties play a crucial role in the society because they ensure that the diverse opinions of its people are represented (Zappala, 1998); hence there are no instances of dissatisfaction within it that may end up leading to revolutions such as the famous French Revolution. The Australian political system has what is considered to be a mild two party system, as seen through the existence of two dominant political groupings which often tend to pursue different political policies altogether. These groupings, namely the Australian Labour Party, and the Coalition, pursue different policies in all the aspects of government at the federal level and this ensures that the democratic system of Australia remains robust. Among the most contested aspects of policy that have often led to the coalition between these two political parties has been on matters concerning the national security of Australia. Over the last few years, there has emerged a great debate between the Australian Labour Party and the