Although the media continue to closely monitor developments of the covid-19 pandemic, financial markets have found another source of concern: interest rates. Indeed, investors have long been accustomed to low interest rates by central banks. In 2021, the bond markets experienced strong shocks that financiers were no longer used to. Since January 1, ten-year rates have climbed 0.63% in the United States, 0.80% in Canada and 0.53% in the United Kingdom. Even in Switzerland, Confederation rates jumped 0.30%.
The consequences have been quite different depending on the nature of the asset.
OUTLOOK FOR THE FINANCIAL MARKET AND OTHER IMPORTANT TOPICS FOR INVESTORS A turning point in the markets Inflation, high interest rates, risks of slower consumer spending, possibility of a US hard economic landing and increased geopolitical tensions are just some of the many issues that investors must currently deal with. We have seen new worries…
Investors often distinguish between high growth companies ("growth stocks") and defensive companies ("value shares"). The purpose of this distinction is to take into account the expected future growth in the frame of the valuation of the share price. Indeed, this is the only realistic way to compare a growing company with a company whose business…
Intuitively, changes in company shares should follow changes in company profits. The more a company grows its profits, the greater the creation of shareholder value should be.
However, interest rates and injections of liquidity by central banks have distorted this relationship between earnings and stock price development.
Here are some examples of well-known values.
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