
Coming Into Focus
The Memo by Howard Marks
The Effect of Lower Interest Rates on Asset Prices
The p offers such an earning's yield when its earnings represent six and a half % of its price. Lower rates mean higher ces for stocks, just as they do for bonds. Fifth, the fed also has the ability to lower yields by buying bonds. And since companies earnings generally grow while bonds interest coupons don't, it can be argued that required return on stocks should be even lower.
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