Adjust cheers for inflation

Sat., March 16, 2013

As the S&P 500 nears its historical high of 1,565.15 (first reached Oct. 1, 2007) the market observer seems euphoric. Better wait to celebrate, I suggest.

The negative effects of “Main Street” inflation over the past five years and five months (5 percent compounded annually) means that our purchasing power since then has been reduced by 30 percent.

The time to celebrate is when the S&P 500 reaches the level of 2,035 (130 percent of 1,565.15), and no sooner.

Sidney Smith

Coeur d’ Alene

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