Financial Markets Book Financial Markets For The Rest Of Us
An Easy Guide To Money, Bonds, Futures, Stocks, Options, And Mutual Funds
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by Robert Hashemian

Page 173

  • 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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