Inflation, Valuations and the Benefits of Dividend Growth with Simeon Hyman
Excess Returns
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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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