Stock indexes do very poorly vs inflation. There are always individual companies/industries that may thrive in any kind of conditions, but broad-based indexes like Dow Jones & S&P500 do not react well to inflation. See this paper:
Inflation Hedging for the Short-Term & Long-Term
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1394810
When there is a sudden outburst of prolonged inflation:
* Commodities outperform all other investment classes for 6-18 months, all other asset classes lose value or are flat.
* During the 2-5 year range (after the beginning of an inflation shock) commodity prices start to level off or decline after a big run-up, long-term & short-term bonds start doing better due to high interst rates. But stocks tend to still stay flat.
* After 5 years, stocks, bonds and short-term bonds (cash) start to perform better & regain their historical risk-return tradeoff.
Thank you very much for the tip and info. :-)