In the investment world, inflation is often viewed as an unfavourable information signal for the market, but this perspective is worth re-examining. In fact, the relationship between inflation and the stock market is far from a simple negative correlation; the key lies in whether inflation is within a "stable and moderate" range.

By analyzing the year-on-year trends of core CPI inflation and the NASDAQ Composite Index, we can observe an interesting phenomenon: when inflation rises steadily but does not exceed a reasonable threshold, these two indicators often show a synchronous upward trend. This suggests that moderate inflation does not suppress the vitality of the stock market; rather, it may be a signal of healthy economic operation.

In this case, economic demand is released steadily, corporate profit expectations remain stable, and the market does not need to worry about uncontrolled inflation or abrupt policy contraction. This creates favorable conditions for the continuous rise of the stock market and provides a good environment for the continuation of a bull market.

The real threats to a bull market are two extreme situations: excessively high inflation and economic recession. When inflation breaks through a reasonable range, it may trigger a tightening of monetary policy, leading to increased financing costs, pressure on corporate valuations, and ultimately resulting in capital withdrawal from the stock market. On the other hand, an economic recession will directly impact corporate profitability; even if inflation is low, the stock market may decline due to deteriorating fundamentals.

Therefore, investors need to abandon the simplistic thinking of "inflation is Unfavourable Information" and instead focus on the magnitude and stability of inflation. As long as inflation remains within a reasonable range, there is no need to overly worry about its impact on the bull market. Only when inflation spirals out of control or signs of economic recession appear should one be cautious of market correction risks.

Adopting this rational perspective on the relationship between inflation and the market is crucial for accurately grasping the rhythm of a bull market and avoiding key risks. Investors should cultivate sensitivity to economic indicators and analyze various factors comprehensively, rather than simply equating a specific indicator with market trends.

Overall, moderate inflation may be a reflection of economic vitality rather than the end of a bull market. It is only when inflation spirals out of control or when the economic fundamentals deteriorate that it could pose a real threat to a bull market. In a complex and ever-changing market environment, maintaining calm and rational judgment is essential for making wiser investment decisions.