Who is John Galt?
- Mile High City
Completely agree about debt. Some of that inflation hedging effect is already backed into the stock returns though, because most companies take on lots of debt to finance their operations.
You're assuming that the price of the stock has something to do with its financial outlook. Even if all companies held more debt than capital (which many don't), and inflation marched along eroding that debt, making the company more profitable, you may well find that the stock price goes down, not up, because consumer purchasing power has eroded.
Stocks trade based on what people think they're worth, not what they're actually worth. A company can benefit from inflation and still have its stock price go down due to inflation.