Inflation, Valuations and the Benefits of Dividend Growth with Simeon Hyman
Excess Returns
Impact of Interest Rates on Stock Market Valuations
This chapter explores the nuanced relationship between interest rates and stock market valuations, revealing that the market impact of a 1% increase in interest rates may not align with common expectations. It discusses the current valuation of stocks compared to bonds, warning against using valuation as a short-term timing tool and emphasizing its role in assessing long-term returns. Additionally, the conversation touches on how indexing has influenced the underperformance of small and mid-cap stocks, prompting investors to reconsider traditional asset allocations.
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