tag:blogger.com,1999:blog-1527840491496268397.post1950245869757994725..comments2024-03-08T11:20:30.095-07:00Comments on Credit Bubble Stocks: Recap of Various Thoughts on Interest RatesUnknownnoreply@blogger.comBlogger6125tag:blogger.com,1999:blog-1527840491496268397.post-9819849065583178772014-08-11T14:21:05.022-07:002014-08-11T14:21:05.022-07:00Exactly, stocks are actually much more sensitive t...Exactly, stocks are actually much more sensitive to interest rate increases than treasuries.CPhttps://www.blogger.com/profile/12701174164478027499noreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-37107571901793489232014-08-11T14:14:46.480-07:002014-08-11T14:14:46.480-07:00You assert that stocks are "low" paying ...<i>You assert that stocks are "low" paying while ignoring reality that stocks pay MORE that bonds</i><br /><br />The comparison is meaningless because stocks and Treasurys have completely different durations. The ten-year note has a ten-year duration. Stocks have a decades-long effective duration. <br /><br />Also what Nathan said.Jameshttps://www.blogger.com/profile/06597727760854955867noreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-10877179150683594312014-08-11T13:32:42.103-07:002014-08-11T13:32:42.103-07:00The S&P dividend yield is 1.93%, less than the...The S&P dividend yield is 1.93%, less than the yield on the 10 year treasury.<br /><br />http://www.multpl.com/s-p-500-dividend-yield/Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-79527984799834435552014-08-11T08:17:57.884-07:002014-08-11T08:17:57.884-07:00As a concrete example, consider the proposed canal...As a concrete example, consider the proposed <a href="http://www.reuters.com/article/2014/07/08/us-nicaragua-canal-idUSKBN0FD06Q20140708" rel="nofollow">canal across Nicaragua</a>.<br /><br />It takes a special kind of stupid to apply the Fed model to these "high-yielding" businesses and not realize that any purported increase to their NPV invites more competition. Consider that we even have industries with excess capacity (e.g. retail, automobiles) where investors are willing to fund new entrants for the vague promise of future earnings.<br /><br />Whose profits are safe while there are buyers for AMZN, FB, NFLX and TSLA?Nathannoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-83886921355488798982014-08-11T07:02:13.148-07:002014-08-11T07:02:13.148-07:00I think what people miss when comparing dividend y...I think what people miss when comparing dividend yields to long-term interest rates is that low rates remove barriers to entry. You can't compare a 5% AT&T dividend to a 2.5% 10-year treasury bond because the difference in yield, if it is perceived to be durable, is precisely what will inspire new competition for AT&T. For example, Google could create a viable competitor to AT&T or Comcast for a small fraction of their current market caps. Even natural monopolies can be threatened by new technology (e.g. solar).<br /><br />People also don't realize that stocks yielding significantly more than bonds is actually the historical norm. Prior to 1960 that's exactly how things worked.<br />Nathannoreply@blogger.comtag:blogger.com,1999:blog-1527840491496268397.post-19947089326907445102014-08-10T09:25:30.188-07:002014-08-10T09:25:30.188-07:00What low dividend yields on stocks are you talking...What low dividend yields on stocks are you talking about? <br />Many quality stocks are paying 2% or more. Yes, stocks compete with bonds and with bonds so low, stocks are even more attractive. Add to that that many stocks increase their dividend year after year while bonds are stagnant. <br />Your zest for bonds has clouded your thinking.<br />You assert that stocks are "low" paying while ignoring reality that stocks pay MORE that bonds. <br />I guess a man sees what he wants to see and disregards the rest. whydibuyhttps://www.blogger.com/profile/10101676402335591169noreply@blogger.com