Investors don’t normally think about equity prices as exchange rates, but in a sense, they are: when one sells or buys stocks, one either raises cash or pays cash in a fiat currency. The S&P 500®, for example, can be thought of as the exchange rate between the shares of the companies in that index and the US dollar (USD). Although equity markets have been susceptible to enormous bear markets when viewed in USD terms (down 89% between 1929-33, -47% in 1973-74, -50% in 2000-02 and -60% in 2007-09), for the most part, equities go higher when seen in fiat currency terms. The general tendency of equity markets to rise ... (full story)