Talking Like Volcker, Channeling Burns (guests: Rob Arnott, Brent Kochuba)
The Market Huddle
00:00
Why Higher Interest Rates Mean Better Value Than Growth?
Growth stocks have most of their future earnings way out in the future. Low rates mean that growth stocks are worth a lot more then relative to value, than when rates are high. If you look at a a company that has rapid expected growth and you're discounting at a higher rate,. it's worth less. But if it's presumed to grow more a, it's worth more. And the growth and the discount rates are linked. The very low interest rates of the last decade have gone hand in hand with very low growth rates. I'm not saying the fed raising rates is going to raise growth. I am saying getting rid of negative real rates will raise growth.
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