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Sep 13, 2020 20 min

Do Low Interest Rates Affect Stock Prices?

from Broken Pie Chart Hosted by Broken Pie Chart

Lately you have probably heard analysts going on CNBC saying given where interest rates are valuations are or are not overstretched. But how do interest rates, and low interest rates, affect stock valuations? How to they affect the cost of capital and the ROIC or return on invested capital? How do you discount down future earnings based on a discount rate? Why interest rates matter to investors The present value of future earnings Interest rates and the WACC or weighted average cost of capital How low rates may make it easier to achieve ROIC greater than WACC Historical risk free rates in US Treasury Bonds and Bills Mentioned in this Episode: US Treasury Bonds Historical Yield Curve Site https://www.treasury.gov/resource-center/data-chart-center/interest-rates/pages/TextView.aspx?data=yield Warren Buffett Indicator explained podcast and article https://razorwealth.com/the-buffett-indicator-explained/ Derek Moore's book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr Contact Derek www.razorwealth.com

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