Measuring and Forecasting Inflation

Inflation deserves its own treatment rather than a bullet in a list of indicators, because it is the only variable in this book that silently reprices everything else you own. A nominal return is an opinion; a real return is a fact. If your portfolio compounds at 7% while prices rise at 3%, you are getting 3.9% — and if you plan on the 7%, you will reach the end of twenty years with 45% less purchasing power than the projection promised, having done nothing wrong.