Looking back at economic conditions in October, culminating in a Federal Reserve meeting which announced probable “tapering” but not raising interest rates, three particular points jump out at us.

It should probably be obvious, but when inflation has been high in the United States in the past, indices which are outside of the United States have tended to outperform. There is a phenomenon in financial behavior, however, known as 'home bias'.

The financial industry has various ways of classifying stocks. One is size, but there are also styles of investing, such as buying companies which are expensive (meaning the price is high relative to sales, or earnings or revenues or cash flow, or some other form of income). If stocks are expensive, it's like they are expected to have high earnings growth, otherwise why would investors pay more for them than for the "cheap" stocks?

We’ve recently written about various asset classes (commodities, real estate, bonds) during high and low inflation periods. This time, let's zoom in on the stocks.