Tuesday, May 27, 2003

Business Week: Deflation
Declining interest rates and rising unemployment make me worry about deflation. Japan's been living with it for more than a decade. So what are the implications for investing in the stock market? First off, don't: Japanese stocks have been in a nose dive since 1989. For a business to survive deflation, it needs to keep debt low and avoid long term commitments to buy at a fixed price. Cheap restaurants, discounters, importers and providers of mental health services thrive.