When the dollar crashes - what will individual stock prices do?

[cbc58]

Is this a correct assumption of what stock prices will do if the dollar crashes:

Dollar crashes and it takes more dollars to buy the same thing. If it takes $20 dollars to buy something that cost $1 then a stock valued at $10 would go to $200 20x10.

Is that wishful thinking or about right? Doesn't really make sense.

 

[constitutional]

That's right, if such scenario occurs, your yearly income will be up by something like 800% depending on the inflation rate.

 

[Dr.3D]

Is this a correct assumption of what stock prices will do if the dollar crashes:

Dollar crashes and it takes more dollars to buy the same thing. If it takes $20 dollars to buy something that cost $1 then a stock valued at $10 would go to $200 20x10.

Is that wishful thinking or about right? Doesn't really make sense.

Well, those who bought a stock at $10 would then have a stock that is worth $0.50.

Yes, the stock would say it was worth $10 but if $10 only buys $0.50 worth of stuff, then the value of the stock would only be $0.50.

 

[danberkeley]

Is this a correct assumption of what stock prices will do if the dollar crashes:

Dollar crashes and it takes more dollars to buy the same thing. If it takes $20 dollars to buy something that cost $1 then a stock valued at $10 would go to $200 20x10.

Is that wishful thinking or about right? Doesn't really make sense.

That's assuming people accept your dollars. At some point, the dollar could be so worth less that it's only uses are: toilet paper, recycled paper, and to stay warm by burning it.

 

[Dr.3D]

That's assuming people accept your dollars. At some point, the dollar could be so worth less that it's only uses are: toilet paper, recycled paper, and to stay warm by burning it.

Better to buy some telephone books and keep them for emergency toilet paper and something to start a fire with. Those FED notes are kinda hard on the rear end.

 

[constitutional]

Better to buy some telephone books and keep them for emergency toilet paper and something to start a fire with. Those FED notes are kinda hard on the rear end.

Not to mention all the germs on those dollars. Don't complain if you start getting reaction in the rear end.

 

[tmosley]

But hey, dollars are nice and durable. You can wash them out and use them again!.

 

[HOLLYWOOD]

Better to buy some telephone books and keep them for emergency toilet paper and something to start a fire with. Those FED notes are kinda hard on the rear end.

I don't think I'll have a problem wiping my A$$ with this man's NOTE...

 

[theoakman]

Is this a correct assumption of what stock prices will do if the dollar crashes:

Dollar crashes and it takes more dollars to buy the same thing. If it takes $20 dollars to buy something that cost $1 then a stock valued at $10 would go to $200 20x10.

Is that wishful thinking or about right? Doesn't really make sense.

every product is different. Some things will be in high demand. Other's will be in no demand. I'm pretty sure no one is going to care about Pokemon cards during hyperinflation.

 

[tremendoustie]

The idea is right -- in a monetary crisis stock is better than cash. Stocks would go way, way up, although probably not enough to compensate for the inflation. So, for example, your $10 stock would sell for $200, but that $200 would be worth like five bucks.

 

[Fox McCloud]

But hey, dollars are nice and durable. You can wash them out and use them again!.

yup, because they're actually a mixture of fabric and paper (special top-secret blend, apparently...along with the special top-secret ink xD)...that's the only reason they last as long as they do (even then, not that long).

We could go the way of Australia and use plastic money

 

[eric_cartman]

in general... yes... if the dollar crashes, the US dollar value of US stocks will go up in value.

if i had the choice of holding US dollars, or shares in the DOW for the next 5 years, i'd take the stocks over the paper money.

in the event of hyperinflation, i think a lot of stocks will go bankrupt, and go to zero regardless. some of these stocks will be worth nothing.

but many stocks, espeically big multi-national companies, will go up measured in dollars.

like in Zimbabwe, the stock market was going up by 33% every single day, but the currency would decline by 50% everyday... therefore, you were better off in Zimbabwe stocks than you were in Zimbabwe dollars. but you were much better off in foreign currencies and foreign stocks (or gold of course) than you were in Zimbabwe stocks.

so even though the dollar value of US stocks will go up during hyperinflation, the dollar value of foreign stocks will go up even more... so you're much better off in foreign stocks than US stocks.

but i expect the inflation to be so bad, that US stocks will go up. this will be very confusing at first. the DOW might rally back up to 14,000... then mainstream economists will think we are in a recovery. others will think the market is headed lower since the fundamentals for the economy have not changed. then, the market will go up to 20,000 or 30,000... and by the time the DOW makes it to 50,000.... i think people might start to figure out that there is massive inflation, and that is the only reason causing stocks to rise.

 

[sevin]

in general... yes... if the dollar crashes, the US dollar value of US stocks will go up in value.

if i had the choice of holding US dollars, or shares in the DOW for the next 5 years, i'd take the stocks over the paper money.

in the event of hyperinflation, i think a lot of stocks will go bankrupt, and go to zero regardless. some of these stocks will be worth nothing.

but many stocks, espeically big multi-national companies, will go up measured in dollars.

like in Zimbabwe, the stock market was going up by 33% every single day, but the currency would decline by 50% everyday... therefore, you were better off in Zimbabwe stocks than you were in Zimbabwe dollars. but you were much better off in foreign currencies and foreign stocks (or gold of course) than you were in Zimbabwe stocks.

so even though the dollar value of US stocks will go up during hyperinflation, the dollar value of foreign stocks will go up even more... so you're much better off in foreign stocks than US stocks.

but i expect the inflation to be so bad, that US stocks will go up. this will be very confusing at first. the DOW might rally back up to 14,000... then mainstream economists will think we are in a recovery. others will think the market is headed lower since the fundamentals for the economy have not changed. then, the market will go up to 20,000 or 30,000... and by the time the DOW makes it to 50,000.... i think people might start to figure out that there is massive inflation, and that is the only reason causing stocks to rise.

precisely.

Next spring or summer, the DOW will go up, the talking heads will praise the bailouts, people across the country will breathe a sigh of relief and assume things are going to get better. Then one day they'll go to the store and wonder why bread is $20 a loaf.

 

[tremendoustie]

in general... yes... if the dollar crashes, the US dollar value of US stocks will go up in value.

if i had the choice of holding US dollars, or shares in the DOW for the next 5 years, i'd take the stocks over the paper money.

in the event of hyperinflation, i think a lot of stocks will go bankrupt, and go to zero regardless. some of these stocks will be worth nothing.

but many stocks, espeically big multi-national companies, will go up measured in dollars.

like in Zimbabwe, the stock market was going up by 33% every single day, but the currency would decline by 50% everyday... therefore, you were better off in Zimbabwe stocks than you were in Zimbabwe dollars. but you were much better off in foreign currencies and foreign stocks (or gold of course) than you were in Zimbabwe stocks.

so even though the dollar value of US stocks will go up during hyperinflation, the dollar value of foreign stocks will go up even more... so you're much better off in foreign stocks than US stocks.

but i expect the inflation to be so bad, that US stocks will go up. this will be very confusing at first. the DOW might rally back up to 14,000... then mainstream economists will think we are in a recovery. others will think the market is headed lower since the fundamentals for the economy have not changed. then, the market will go up to 20,000 or 30,000... and by the time the DOW makes it to 50,000.... i think people might start to figure out that there is massive inflation, and that is the only reason causing stocks to rise.

Uh, people would figure it out a long time before 50,000. They'd figure it out around the time bread is $5 a loaf and gas is $10 a gallon, and that's 20% more than what it was the month before, and 40% more than the month before that ...

 

[cbc58]

This is why I asked the question.

Could the current stock market actually be stronger then it was a little while ago since the value of the dollar has increased signifigantly... since it takes less dollars to buy the same stock?

What overseas stocks would you invest in ?

 

[Thrashertm]

Is this a correct assumption of what stock prices will do if the dollar crashes:

Dollar crashes and it takes more dollars to buy the same thing. If it takes $20 dollars to buy something that cost $1 then a stock valued at $10 would go to $200 20x10.

Is that wishful thinking or about right? Doesn't really make sense.

You have to factor in the impact that hyperinflation will have on a business' earnings and viability. Will a business continue to be viable its customer cannot afford its products or services? Consider the stock value of companies operating in Zimbabwe.

You are probably better off being in hard assets (commodities)

 

[CUnknown]

I agree with those who have said that, yes, stocks are better than cash during hyperinflation, but commodities are better still.

That is because the collapse of the dollar will also cause a collapse of our economy. Many if not most businesses will go bankrupt, and certainly their stocks will not rise. It would take a really amazing choice of stock to even just keep up with inflation -- these would be companies that can still survive and prosper during completely chaotic and probably violent times (i.e. times when people aren't contentedly buying the latest summer fashions at Target). So, stocks are better than cash, but pick wisely.

Or you can just take gold, agriculture, and other commodities and rise with inflation automatically. Why take the risk of picking a wrong stock?