Relationships in the physical world tend to be immutable, e.g., water freezes at 32°F and boils at 212°F. Relationships in the economic and financial world can be more variable. Financial mathematical relationships are immutable, e.g., $1 invested at 7.2% per year will double in 10 years. However, both the nominal and real (after-inflation) returns from all types of investments have varied widely. Varied as well have been rates of change for important variables such as overall economic growth and inflation. Recent unexpected events including pandemic and war have impacted economic and market relationships. A review of some key relationships can provide perspective for investing ahead.
Relationships
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