Where are the markets heading?

Everyone these days are expecting the stock market is in a bubble and correction is due , but i personally wanted to check what does the data indicates . The media news and expert opinions are that fear of rising inflation and consequently rising interest rates will lead to havoc in the market .

I have plotted the inflation change in the US market viz a viz the returns provided by Dow jones in that period and have also taken year 2008 in to consideration for covering stress scenarios. It seems like inflation is good for the market considering the 13 year period plotted here seems to indicate that apart from small short term shocks the market bounces sharply leaving behind transitionary impact of inflation . We believe the markets are going to be steady from here on and see healthy correction only to move ahead as its done in the past!

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