Bargains aren't as plentiful as they used to be, alas. The S&P 500 has, after all, soared more than 40% since touching its March lows.

By way of recompense, there is the likely fact that, if you stuck it out like all good Fools should, you're probably 40% (or more) wealthier than you were in March.

And who knows? You might even be back on track to retire when you planned to.

One small problem
Your investment plans were no doubt predicated on continuing to earn, if not 40% in a matter of months, then something approaching the market's historical average of roughly 10% per annum.

But here's a dirty little secret: You're going to need to earn more than that, much more.

Invest $10,000 a year over the next 20 years at that rate and, yes, you'll have roughly $630,000 at the end of the period. That figure, however is "nominal," not "real," which is just a fancy way of saying it doesn't account for inflation, a beast that hit its highest level in nearly a year last month.

Factor that in, and the purchasing power you'll have with your seemingly fat nest egg will be less than $350,000.

How not to proceed
That ugly math is why investors often gravitate toward riskier fare during inflationary periods, gambling that the potential downside risk outweighs the guaranteed erosion of purchasing power that inflation ensures.

Logical? Well, yes -- at least as a general principle. It even looks like it's held true in this most recent debacle.

Riskier fare has shellacked more buttoned-down plays over the last few months, and real names provide telling, even chilling detail: the iShares Russell 2000 Growth ETF (IWO) -- home to the profitability-challenged likes of Palm (Nasdaq: PALM), which is up more than 400% so far this year, and fellow triple-digit gainer J. Crew (JCG) -- has sailed past its Russell 1000 Value (IWD) sibling.

Unfortunately, though, this growth-fuelled rally isn't sustainable.

To be sure, the former ETF has its fair share of small-cap keepers, but Palm, in particular, serves as a textbook case study of the kind of stocks Fools should avoid: Pre-Pre, Palm hemorrhaged cash, shedding more than $200 million of it during the fiscal year that ended this past May.

And one bit-of-a-hit product does not a business model make, particularly given the company's anemic return on equity (ROE) and return on assets (ROA) figures. These key profitability metrics double as proxies for managerial acumen and, tellingly, both have been mired in negative territory during each of the last two fiscal years. Continued...