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- Very strong dollar against other currencies, which is bad for
exporters who must compete against local products abroad.
Domestic products have a tougher time competing with the
imports. Exporters also see their overseas profits shrink in terms
of dollars as the exchange rate yields fewer dollars against the
foreign currencies.
- Very weak dollar against other currencies, which is bad for
importers because it drives up the cost of imports. The Fed may
raise interest rates to defend the weak dollar, and high interest
rates are bad news for companies.
- Overheated housing market.
So which stocks may not be adversely affected by inflation? Take
gold-mining stocks as an example. During inflationary periods, there is
heavy demand for gold as an alternative investment. Companies in the
gold business would actually see their revenues grow, which may
actually help their stock values increase. Generally, however, inflation is
something we can all do without, but as history has shown, it cannot be
indefinitely avoided.
Sectors
The US stock market is made up of over 10,000 different stocks, and
every day new issues are added to this list. Keeping tabs on all of these
stocks is a monumental task, but as is done with many things that come
in great numbers, stocks can be classified in groups based on the
industries their companies are active in. These classes are known as
sectors, and they can be as broad or as granular as one wants them to
be.You may have heard of the financial or the technology sectors. These
are broad classifications. You may have also heard of Internet
advertising or home appliance sectors. These are more granular sectors. …
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