[Tyga11]

Ummmmmm didn't the S&P rise almost 60% over the past 2 years in a rising interest rate environment?

The whole thing is stupid anyways. If we get 'bad news' for a few months everyone will freak out and think we're heading for a recession if the unemployment goes >4.6%. I'd rather have the situation we are in now even if inflation goes up a little bit.

[2000cs]

Originally Posted by Tyga11

Ummmmmm didn't the S&P rise almost 60% over the past 2 years in a rising interest rate environment?

The whole thing is stupid anyways. If we get 'bad news' for a few months everyone will freak out and think we're heading for a recession if the unemployment goes >4.6%. I'd rather have the situation we are in now even if inflation goes up a little bit.

I didn’t say the market would not rise in a rising interest rate environment. What I intended was that the realization that interest rates likely won’t be cut in the next little while resulted in a revaluation downward, especially of tech and emerging companies. After that, the trend up should resume.

[kscarrol]

Finance 101, opportunity costs. When rates were low/zero, the market was the only place to earn a real return. Now you get get close to 5% on a risk free US treasury. We also value companies, at least we used to, using discounted cash flows. The higher the discount rate is, the less valuable that stream of future cash flows is worth.

[Tyga11]

Originally Posted by kscarrol

Finance 101, opportunity costs. When rates were low/zero, the market was the only place to earn a real return. Now you get get close to 5% on a risk free US treasury. We also value companies, at least we used to, using discounted cash flows. The higher the discount rate is, the less valuable that stream of future cash flows is worth.

Are you saying the market is still too overvalued to justify equities? Is that your argument?

Because you could have received the 5% you are talking about the past 2 years.

[Tyga11]

Originally Posted by 2000cs

I didn’t say the market would not rise in a rising interest rate environment. What I intended was that the realization that interest rates likely won’t be cut in the next little while resulted in a revaluation downward, especially of tech and emerging companies. After that, the trend up should resume.

I think we have to realize the 'selloff' (if we even want to call it that) is a result of technical trading. I don't see why big tech can't operate in a high interest rate environment like they have been.

Do you agree with my point? I would rather see a strong economy + lower unemployment + slightly higher inflation than the inverse.

[kscarrol]

Originally Posted by Tyga11

Are you saying the market is still too overvalued to justify equities? Is that your argument?

Because you could have received the 5% you are talking about the past 2 years.

Can you show me where I said that? Having been in the finance world for almost three decades I simply pointed out that investors always have other opportunities/options to put their money to work. When rates were zero and folks couldn’t get a return in a savings account, CD or bonds then equities were the place to be. Now folks have some options. Investing is always about risk versus reward. For older folks who are retired or near retirement, getting 5% with essentially zero risk is appealing.

I’m fully invested and always have been with no bond holdings.