“There is much evidence that common stock returns and inflation have been negatively related during the post-1953 period. Zvi Body, Jeffrey Jaffe and Gershon Mandelker, Charles Nelson, and my article with G. William Schwert document negative relations between between stock returns and both the expected and unexpected components of inflation. These results are puzzling given the previously accepted wisdom that common stock, representing ownership of the income generated by real assets, should be a hedge against inflation.” Read more.