The Intelligent investor by Benjamin Graham | Episode 1 |
The Audiobooks Podcast
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The Effect of Inflation on Shares of Common Stocks
Inflation has not had any direct effect on reported per share earnings. The only way that inflation can add to common stock values is by raising the rate of earnings on capital investment. A rise in wage rate succeeding the gains in productivity, and a need for huge amounts of new capital have held down the ratio of sales to capital employed. It is surprising how little attention has been paid by economists and by Wall Street to this development.
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