http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down Will Higher Interest Rates Drive Stock Prices Down? The US Federal Reserve intends to raise interest rates although the timing of such a move is uncertain. For investors a question that comes to mind is, will higher interest rates drive stock prices down? In a recent interview on CNBC Warren Buffett said that today interest rates are key to valuing stocks. Billionaire Warren Buffett said Monday the stock market would be viewed as “cheap” now if interest rates continued to remain low. “If these interest rates were to continue for 10 years, stocks would be extremely cheap now,” the chairman and CEO of Berkshire Hathaway said Monday on CNBC’s “Squawk Box,” two days after Berkshire’s annual shareholder meeting. If rates normalize, stocks would be on the high side on a valuation basis, he said. Will higher interest rates drive stock prices down? The most trusted investor in the world thinks so. Interest Rate Assumptions Forbes published an article about dangerous interest rate assumptions. Global markets are obsessed with U.S. interest rate policy, and for good reason. Interest rates around the world have been lowered in the continuing monetary fight against slow growth and recessions. Interest rates are incredibly important because they are the framework by which the value of assets are assessed and they are a reflection of the health of the economy. Additionally, a mismatch between market expectations and interest policy is the single biggest known risk to global markets. Because the U.S. economy has been viewed as “better” than the rest of the world, and because of the inherent importance of interest rates to global assets, markets have become obsessed with the timing and effects of U.S. interest rate rises. The point is that changes in interest rates will have economic effects and much higher interest rates will dive stock prices down as they drive the dollar up, make exports less competitive and potentially cause harm to the recovering US economy. European Interest Rates The European Union is the other super world economy with a GDP similar to that of the USA. The EU took a different course when the 2008 recession hit and has paid a price. The US Federal Reserve loosened credit, bailed out banks and GM and poured money into the bond markets with its quantitative easing program. As the US economy is recovering the Europeans are at long last copying the US quantitative easing program and driving interests rates into the negative range and driving the value of the Euro down. This makes US products more expensive in foreign markets and if US rates go up it will get worse. Will higher interest rates drive stock prices down? It would appear so although the US remains in an enviable position of having its banking system make sense unlike the Europeans.

1. Will Higher Interest Rates
Drive Stock Prices Down?
By www.ProfitableInvestingTips.com

2. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
The US Federal Reserve
intends to raise interest rates
although the timing of such a
move is uncertain.

3. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
For investors a question that
comes to mind is, will higher
interest rates drive stock
prices down?

4. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
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5. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
In a recent interview
on CNBC Warren Buffett said
that today interest rates
are key to valuing stocks.

6. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
Billionaire Warren Buffett said
Monday the stock market
would be viewed as “cheap”
now if interest rates continued
to remain low.

7. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
“If these interest rates were to
continue for 10 years, stocks
would be extremely cheap
now,” the chairman and CEO
of Berkshire Hathaway said
Monday on CNBC’s “Squawk
Box,” two days after
Berkshire’s annual shareholder
meeting.

8. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
If rates normalize, stocks
would be on the high side on a
valuation basis, he said.

9. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
Will higher interest rates drive
stock prices down?

10. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
The most trusted investor in
the world thinks so.

11. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
Interest Rate
Assumptions

12. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
Forbes published an article
about dangerous interest
rate assumptions.

13. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
Global markets are obsessed
with U.S. interest rate policy,
and for good reason.

14. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
Interest rates around the
world have been lowered in
the continuing monetary fight
against slow growth and
recessions.

15. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
Interest rates are incredibly
important because they are
the framework by which the
value of assets are assessed
and they are a reflection of
the health of the economy.

16. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
Additionally, a mismatch
between market expectations
and interest policy is the
single biggest known risk to
global markets.

17. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
Because the U.S. economy has
been viewed as “better” than
the rest of the world, and
because of the inherent
importance of interest rates to
global assets, markets have
become obsessed with the
timing and effects of U.S.
interest rate rises.

18. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
The point is that changes in
interest rates will have
economic effects

19. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
And much higher interest
rates will dive stock prices
down as they drive the dollar
up, make exports less
competitive and potentially
cause harm to the recovering
US economy.

20. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
European Interest
Rates

21. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
The European Union is the
other super world economy
with a GDP similar to that of
the USA.

22. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
The EU took a different course
when the 2008 recession hit
and has paid a price.

23. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
The US Federal Reserve
loosened credit, bailed out
banks and GM and poured
money into the bond markets
with its quantitative easing
program.

24. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
As the US economy is
recovering the Europeans are
at long last copying the US
quantitative easing program
and driving interests rates into
the negative range and driving
the value of the Euro down.

25. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
This makes US products more
expensive in foreign markets
and if US rates go up it will get
worse.

26. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
Will higher interest rates drive
stock prices down?

27. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
It would appear so although
the US remains in an enviable
position of having its banking
system make sense unlike the
Europeans.

28. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
Paying People to
Borrow Money

29. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
An estimated two trillion euros
of European debt is paying
negative interest rates.

30. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
The Wall Street Journal offers
its take on tumbling interest
rates in Europe.

31. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
Tumbling interest rates in
Europe have put some banks
in an inconceivable position:
owing money on loans to
borrowers.

32. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
At least one Spanish bank,
Bankinter SA, the country’s
seventh-largest lender by
market value, has been paying
some customers interest on
mortgages by deducting that
amount from the principal the
borrower owes.

33. http://profitableinvestingtips.com/investing-tips/will-higher-interest-rates-drive-stock-prices-down
Lower rates in Europe are
causing havoc but if the Fed
decides to raise rates in the
USA, higher rates will drive
down stock prices in the US as
well.