Yea, I think the key here is that we have been in a falling interest rate regime since the early 1980s, and so each recession/bear market has been followed by even lower rates - leading to consistent multiple expansion and appreciation of fixed rate financial assets in general.
IF we are at the start of a long-term uptrend in rates (whic…
Yea, I think the key here is that we have been in a falling interest rate regime since the early 1980s, and so each recession/bear market has been followed by even lower rates - leading to consistent multiple expansion and appreciation of fixed rate financial assets in general.
IF we are at the start of a long-term uptrend in rates (which I'm not positive about, but could be the case), then we should expect a long-term compression in multiples which will more than offset nominal earnings growth.
Yea, I think the key here is that we have been in a falling interest rate regime since the early 1980s, and so each recession/bear market has been followed by even lower rates - leading to consistent multiple expansion and appreciation of fixed rate financial assets in general.
IF we are at the start of a long-term uptrend in rates (which I'm not positive about, but could be the case), then we should expect a long-term compression in multiples which will more than offset nominal earnings growth.