4 ms·
TL;DR: Interest rates don't just affect one side of thing. They are tied to all aspects of pricing. That's very simplistic one-sided view of interest rates. If
by mehrdada 6y ago
TL;DR: Interest rates don't just affect one side of thing. They are tied to all aspects of pricing.
That's very simplistic one-sided view of interest rates. If interest rates stay low or go lower, the stock prices will keep skyrocketing which balances the equation on the other side increasing your stock portfolio returns. The P/E capacity will be much higher than it is today in a perpetual low-interest-rate environment.
- lumost 6y agothat should be a temporary swing though right? once the P/E capacity normalizes to the lower interest rates appreciation should be proportional to the base rate.
- mehrdada 6y agoYes but only if people are convinced to make the call to consider interest rates to remain this low for a long time at once. If they gradually do it and the underlying businesses continue to generate the earnings and growth expected, the outcome is different. In any case if you have made your money today and investing it, 4% may still be quite reasonable.