Last week we talk about fundamental analysis. One of the factors analysed by fundamental analyst is economic factor.
Two words frequently encountered in economic reports these days are Inflation and Stagflation. What exactly do they mean?
Very often when we read reports and analysis, the US market is mentioned. The US market exerts no small amount of influence on other markets, especially those in Asia that depended on export to the US.
The danger of Inflation in US is highly anticipated. Inflation is the sustained increase in the average level of prices of a basket of goods and services. Do you see oil prices going up? How about transportation, groceries? Many believes that the consistently high oil price will trigger an inflation.
Some forecasted that we may even see stagflation in 2007. Stagflation = inflation + slowing economic growth. This was what happened during the 1970s, when world oil prices rose dramatically.
How does all these affect investing? Read on to find out.
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