What Happens To Stocks During Hyperinflation
Stocks in the Weimar hyperinflation are discussed in When Money Dies. I don't own a copy of the book but here is a link to a blog post about it. Speculation on the stock exchange has spread to all ranks of the   population and shares rise like air balloons to limitless heights Basically, the stock market did very well (i.e. the US dollar value of stocks increased quite a lot. Of course, the price of everything increased if measured in marks.) Quote from the article: Bottom line: In marks, stocks had an amazing run. Even in USD they had   a nice runup. It makes sense that the stock market would skyrocket because (a) if  money has no value, then people will want to replace money with tangible things like goods, and since a stock represents a share in the factories and things which a company owns, it makes sense that you would want them and (b) if money has no value anyway, why not gamble with it? I would be interested to hear what happened in other hyperinflations.
"Disregarding the particular example and focusing on the actual questions: YES, definitely, the whole concept of ""pump and dump scheme"" refers to the many cases when this was intentionally done; Everything has a limit, but the limit can be quite high, especially if starting from a low value (a penny stock) and if the stock is low volume, then inflating ten or hundred times over a real value may be possible; and any value might be infinitely times overvalued for a company that turns out to have a value of zero. Yes, unless it's done very blatantly, you should expect that the ""inflator"" has much more experience in hiding the signs of inflation than the skill of average investor to notice them." "Stock price is set to the price with the highest transaction volume at any given time.  The stock price you cited was only valid in the last transaction on a specific stock exchange. As such it is more of an ""historic"" value. Next trade will be done with the next biggest volume. Depending on the incoming bids and asks this could be higher or lower, but you can assume it will not be too far off if there is no crash underway. Simple example stock exchange:" No, there is no linkage to the value of real estate and inflation. In most of the United States if you bought at the peak of the market in 2006, you still haven't recovered 7+ years later. Also real estate has a strong local component to the price. Pick the wrong location or the wrong type of real estate and the value of your real estate will be dropping while everybody else sees their values rising. Three properties I have owned near Washington DC, have had three different price patterns since the late 80's. Each had a different starting and ending point for the peak price rise.  You can get lucky and make a lot, but there is no way to guarantee that prices will rise at all during the period you will own it. "If you own a stake large enough to do that, you became regulated - under Section 13(d) of the 1934 Act and Regulation (in case of US stock) and you became regulated. Restricting you from ""shocking"" market. Another thing is that your broker will probably not allow you to execute order like that - directed MKT order for such volume. And market is deeper than anyone could measure - darkpools and HFTs passively waiting for opportunities like that." You would generally have to pay interest for everyday you hold the position overnight.  If you never close the position and the stock price goes to zero, you will be closed out and credited with your profit. If you never close the position and the stock price keeps going up and up, your potential loss is an unlimited amount of money.  Of course your broker may close you out early for a number of reasons, particularly if your loss goes above the amount of capital you have in your trading account. Purchases and sales from the same trade date will both settle on the same settlement date. They don't have to pay for their purchases until later either. Because HFT typically make many offsetting trades -- buying, selling, buying, selling, buying, selling, etc -- when the purchases and sales settle, the amount they pay for their purchases will roughly cancel with the amount they receive for their sales (the difference being their profit or loss). Margin accounts and just having extra cash around can increase their ability to have trades that do not perfectly offset. In practice, the HFT's broker will take a smaller amount of cash (e.g. $1 million) as a deposit of capital, and will then allow the HFT to trade a larger amount of stock value long or short (e.g. $10 million, for 10:1 leverage). That $1 million needs to be enough to cover the net profit/loss when the trades settle, and the broker will monitor this to ensure that deposit will be enough. "In addition to the other answers it's also noteworthy that the stock exchanges themselves adjust the price quotes via their ex-div mechanism.  All limit orders present in the book when the stock goes ex-div will be adjusted by the dividend. Which means you can't even get ""accidentally"" filled in the very unlikely case that everyone forgot to adjust their quotes." 2 things may happen. Either your positions are closed by the broker and the loss or profit is credited to your account. Else it is carried over to the next day and you pay interest on the stocks lent to you. What happens will be decided by the agreement signed between you and your broker. Two kinds of lending going on. The first occurs when the Federal Reserve purchases government securities.  This creates reserves at the Federal Reserve in another bank. The second kind of lending comes when this bank lends out the money.  This is the multiplier effect. The reason for the excess reserves now is that banks are gun-shy and afraid to lend.  Their money is safer at the Fed than with commercial and personal borrowers.  When this changes (either by a recovery, or by the Fed penalizing banks for excess reserves, which it can do but hasn't) then we'll see inflation, and a consequential rise in prices. Huh? I don't see how this effects inflation in practice.... (only in theory)  Basically, I sell short end bonds and buy longer end bonds pocketing the difference in yield and increasing my duration.  GLD and mining are hedges against inflation, markets are stupidly short term looking and care only about current expectations, if the current macro situation deteoriates we see prices fall. who issued stock typically support it when the stock price go down.  No, not many company do that as it is uneconomical for them to do so. Money used up in buying back equity is a wasteful use of a firm's capital, unless it is doing a buyback to return money to shareholders. Does the same thing happen with government bonds?  Not necessarily again here. Bond trading is very different from equities trading. There are conditions specified in the offer document on when an issuer can recall bonds(to jack up the price of an oversold bond), even government bonds have them.  The actions of the government has a bigger ripple effect as compared to a firm. The government can start buying back bonds to increase it's price, but it will stoke inflation because of the increase in the supply of money in the market, which may or mayn't be desirable. Then again people holding the bond would have to incentivized to sell the bond. Even during the Greek fiasco, the Greek government wasn't buying Greek bonds as it had no capital to buy. Printing more euros wasn't an option as no assets to back the newly printed money and the ECB would have stopped them from being accepted.  And generally buying back isn't useful, because they have to return the principal(which might run into billions, invested in long term projects by the government and cannot be liquidated immediately) while servicing a bond is cheaper and investing the proceeds from the bond sale is more useful while being invested in long term projects. The government can just roll over the bonds with a new issue and refrain from returning the capital till it is in a position to do so. If you look at a trade grid you can see how this happens. If there are enough bids to cover all shares currently on the sell side at a certain price, those shares will be bought and increased price quotes will be shown for the bids and ask. If there are enough bids to cover this price, those will get bought and higher prices will be shown and this process will repeat until the sell side has more power than the buy side. It seems like this process is going on all day long with momentum either on the upside or downside. But I think that much of this bidding and selling is automatic and is being done by large trading firms and high tech computers. I also feel that many of these bids and asks are already programmed to appear once there is a price change. So once one price gets bought, computers will put in higher bids to take over asks. It's like a virtual war between trading firms and their computers. When more money is on the buy side the stock will go up, and vice versa. I sort of feel like this high-frequency trading is detrimental to the markets and doesn't really give everyone a fair shot. Retail investors do not have the resources and knowledge in order to do this sort of high frequency trading. It also seems to go against certain free market principles in my opinion. "Number 2 cannot occur. You can buy the call back and sell the stock, but the broker won't force that #2 choice. To trade options, you must have a margin account. No matter how high the stock goes, once ""in the money"" the option isn't going to rise faster, so your margin % is not an issue.  And your example is a bit troublesome to me. Why would a $120 strike call spike to $22 with only a month left? You've made the full $20 on the stock rise and given up any gain after that. That's all. The call owner may exercise at any time. Edit: @jaydles is right, there are circumstances where an option price can increase faster than the stock price. Options pricing generally follows the Black-Scholes model. Since the OP gave us the current stock price, option strike price, and time to expiration, and we know the risk free rate is <1%, you can use the calculator to change volatility. The number two scenario won't occur, however, because a covered call has no risk to the broker, they won't force you to buy the option back, and the option buyer has no motive to exercise it as the entire option value is time premium." what will happen to the valuation of Tom's bond holdings after the equity crash? This is primarily opinion based. What will happen is generally hard to predict. Bond Price Bump due to Demand:  Is a possible outcome; this depends on the assumption that the bonds in the said country are still deemed safe. Recent Greece example, this may not be true. So if the investors don't believe that Bonds are safe, the money may move into Real Estate, into Bullion [Gold etc], or to other markets. In such a scenario; the price may not bump up. Bond Price Decline due to Rising Interest Rates:  On a rising interest rates, the long-term bonds may loose in value while the short term bonds may hold their value. Related question How would bonds fare if interest rates rose? As the fed liquidates their fiat, the stock market will go down to zero and bonds will evaporate as their denominated in worthless paper.  [The government is going to come for people's gold and seize assets](http://www.zerohedge.com/news/mark-faber-i-am-convinced-whole-derivatives-market-will-cease-exist-and-will-go-zero)  Guns and canned goods are the only safe investments from here forward.