Are Low Interest Rates Actually Good For Stocks?

Fed model hypothesis

This theory holds that the stock market, at any given point in time is undervalued whenever the earnings yield on equities, which is the inverse of the P/E ratio, is higher than the yield on the 10-year Treasury bond, which is used as a gauge of investors’ expectations for long-term inflation.

Data over the past 150 years, however, reveals that the earnings yield by itself is a more accurate predictor of the stock market’s future return than earnings yields adjusted by the prevailing 10-year Treasury yield. This data shows there is little historical support for the predictive power of the Fed model.

Small-cap winners galore

The big stock market winners share one common attribute: Near the beginning of the ascent of their shares, the companies offer revolutionary products or services, are market leaders in their respective industries, or both. Some big stock market winners that possessed the attributes outlined above are Netflix (NFLX), which we recommended to investors in October 2002; Intuitive Surgical (ISRG), which we bought and recommended in July 2004; (BIDU), which we bought and recommended in August 2006; and MercadoLibre (MELI), which we recommended to investors in October 2010. Get up-to-date small-cap stock picks from David Frazier, editor of Small-Cap Profit Confidential.
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Smarter cryptocurrency investments

The stock market crash of 2008 was the catalyst for his journey into alternatives. And interestingly, it was the impetus behind the creation of Bitcoin and the blockchain technology behind it. Keene Little wasn’t ready to risk his money yet but he was very curious, so he began charting Bitcoin’s technical patterns. What finally convinced him to dip a toe into digital currencies was seeing that they followed familiar price patterns that could be analyzed and successfully acted on. Now he shares those insights with subscribers to the Crypto Wealth Protocol.
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