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steel1

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  1. "Inflation is not a problem today and will not be any time soon -- so holding cash has not resulted in a loss of value." I'd argue that asset inflation will precede physical inflation such that holding cash can result in substantial loss of value in asset terms. The actual damage to purchasing power in terms of physical goods will come more slowly. I believe the current ratio of stock market capitalization to GNP is around 94% (got to 83% in June). Not Buffett's ~80% and you'll do quite well but hardly massively overvalued either, especially relative to alternatives.
  2. "And why does a man who is gloomy about stocks own so much stock? "Partly, it's habit," he admits. "Partly, it's just that stocks mean business, and owning businesses is much more interesting than owning gold or farmland. Besides, stocks are probably still the best of all the poor alternatives in an era of inflation - at least they are if you buy in at appropriate prices." Depends on your view of current prices but the implosion isn't necessarily a given (at least not in nominal terms).
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