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Comment by PaulHoule | Hacker News Reader

People in the 1960's thought inflation would be benign for stocks because earnings go up with inflation but the 1970s was a bad decade for stocks.

The 2010s were a great decade for stocks, the 2020s might not be. That too changes the psychology.

The good times in stocks were supported by very low interest rates, which some people call "financial repression" -- despite that there was tremendous demand for "stablecoins" (government bonds) even at negative real interest rates.

Even if you believe conditions are right for technological and social progress, interest rates will be a headwind for the stock market if they revert to the mean.

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> People in the 1960's thought inflation would be benign for stocks because earnings go up with inflation but the 1970s was a bad decade for stocks.

I hear this a lot. Its true that stock returns relative to inflation weren't great, but what was better? I mean, cash lost a huge percentage of its value. Stocks seemed to pace inflation.

Were bonds a better investment during this period?

Gold was the best investment of the 1970s.

Harry Browne, who ran for president as a libertarian suggested using gold as a hedge

https://www.investopedia.com/terms/p/permanent-portfolio.asp

The "all weather" fund from Bridgewater is similar in thinking but substitutes inflation-protected bonds for gold.

Thank you, that makes a lot of sense and is a perspective that I hadn't thought about.

Makes me wonder about the fate of all these unprofitable startups

If you couldn’t turn a profit during practically the best time for tech startups in 2020-21, I can’t see how you can turn a profit when money is much tighter.

> If you couldn’t turn a profit during practically the best time for tech startups in 2020-21

Online/software-heavy services, tend to be fairly short runway (nothing like the decade plus typical for biotech firms), but still aren't generally zero runway to profitability.

It will be the same as the .COM bubble. Most will die and a few major players will emerge. Especially the startups that were built to be acquired will have a problem.

Not to mention the Fed's balance sheet https://fred.stlouisfed.org/series/WALCL

4 trillion more and doubled since the start of 2020 is crazy.

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