"Exactly Like 50 Years Ago": Unshaken Even When Inflation Hits. 3 Types of Companies That Ultimately Survive｜Seong Sang-hyeon's Macro Beyond, Part 4-2
- What to look for
- Explore a framework for responding to the inflation cycle, from an analysis of real sector returns in the 1970s and an overview of four phases to a diagnosis of the current boundary between phases 1·2 and five investment principles.
- Why it matters
- Understanding the distinction between nominal and real returns and the changes in market leadership across phases can help you establish your own criteria for evaluating sectors and selecting stocks when interest rates and prices are rising.
AI summary
Seong Sang-hyeon rereads the sector heatmap from the 1970s using real rather than nominal returns and says that the phase determines the winners. He explains that every sector posted real losses during the 1st oil shock, and that market leaders changed during the recovery, the 2nd shock, and Volcker's monetary tightening. He reports that prices rose by a cumulative 130% over 10 years and that only three sectors preserved purchasing power. He identifies timing, pricing power, and the discount rate as three lessons and suggests watching the pots into which money flows. He views 2022 as a smaller version of 73·74 and diagnoses the present as the boundary between phases 1·2, with the 10 year yield in the 5% range. He presents five principles—breaking down interest rates, a barbell approach, using real measures, exit rules, and checking market breadth—along with a matrix for each phase. He says he will select market leaders through five screening gates: results, cash flow, explanations of earnings, passing on price increases, and return on capital. All directional outlooks are the speaker's conditional judgments, not definitive predictions of short-term prices.