In regards to the question, technically speaking the answer is correct. They say that out of the 3 main asset classes most people invest in (stocks, bonds, real estate) that stocks are likely to return the most over the long-term, which is true.

Unfortunately as you mentioned, even with the typical growth of the market when you begin to factor in inflation and taxes the real return may not be that good.

So the overall notion to put part of your long-term holdings in stock, as they suggest is probably the easiest way to achieve the highest amount of return without getting into more advanced hedging strategies.

They did allude to options and derivatives, which if you are truly looking for a solid hedge against inflation you could put together a strategy that could accomplish this.

What I do think you may be overlooking with inflation adjusted DJIA chart is that it is simply adjusting the raw number of the price of the dow and that’s it. When you factor in the action of compounding interest over the span of 20, 30 or 40 years in a real world portfolio the true value of your holdings would be significantly greater.

Many stocks offer dividends, if you own any bonds you receive interest and all of this money, if reinvested compounds in the account which boosts the real return over time more than just adjusting the value of an index for inflation.

I do still agree though that simply betting on stocks alone as an inflation hedge isn’t the optimal solution, it just happens to be the easiest for your everyday investor.