MonteQuest wrote:mkwin wrote: Exactly - growth in revenue and hence profits. This is attractive to investors as the dividend yield is only a small element of the return to the investor. Expected growth in future earnings - in this case by a rising all price - is a very big component. As, as oil is driving the inflation, the stock would be a good inflation hedge i.e. it rises faster than inflation.
But the growth will be in inflation, not oil production. Feeding hay to a dead horse for profits?
What happens when the demand for energy outstrips supply?
No growth. No growth in a fiat money system? No new loans. A shrinking deflating money supply as principal is retired?
We're talking about the growth in the relative value of the shares driven by the rising oil price post peak. Demand will already be exceeding supply.
As for the money system - I don't know. It’s very difficult to know what will happen as the situation is so complicated, it depends on the level of inflation and our ability to reduce demand as supply falls. Government will just print money to fund spending but this will just feed into the inflation. The bottom line is we're all going to get a lot poorer relatively but consumer and government debt will also be reduced relatively as inflation will destroy its value.